Confidence drops across UK services in face of higher costs and weak demand
Business confidence plunged this month across the UK’s services sector as mounting cost pressures and weak demand hit profits and undermined the outlook for the rest of the year.The CBI’s latest service sector poll found that a majority of companies were gloomy about their prospects and discounted the acceleration in activity that usually follows the return to work after the summer break.Falling sales and rising costs meant most firms were suffering a profit squeeze, the CBI said, leading to lower hiring and cuts to investment.Consumer services firms reported a negative outlook for the eighth consecutive month while services companies that sell to other businesses reported a decline in activity for the fourth consecutive month.Optimism about the general business situation deteriorated, though the panic induced in the previous quarter by Donald Trump’s initial tariffs was much reduced.
A balance of those firms optimistic about the next quarter fell back from -43% in May to -29% in August.Alpesh Paleja, deputy chief economist at the business lobby group, said the survey still “painted a grim picture of the services sector”, adding that “pockets of resilience” were unable to reverse a downward trend going back more than a year.Services account for about three-quarters of economic activity in the UK and the sector acts as a bellwether for the state of the economy.Paleja said: “Rising employment costs continue to drive cost pressures higher, while subdued demand conditions are holding pricing power in check.The impact is being felt in lower hiring, investment and profits, with companies increasingly shifting focus to short-term firefighting.
”The CBI quarterly survey comes after similar concerns were voiced by respondents to a monthly S&P Global health check of the industry, which registered its biggest drop in new orders in almost three years in July,A study this week by the Resolution Foundation updating official unemployment figures found that the rate in June of 4,7% had already accelerated to 5% in August as firms delayed replacing staff with new recruits,The “nowcasting exercise” revealed the pressure on the government ahead of the autumn budget, when the chancellor will say she wants to increase economic growth and employment,Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe Bank of England will be torn in different directions by the data.
Rising jobless figures will spur calls for an interest rate cut at the same time concerns about high inflation will encourage demands for the cost of borrowing to remain high.Official data on Wednesday showed manufacturers suffered a similar squeeze on profits after UK factory gate prices rose at their fastest pace in two years in June.Prices charged by firms increased 1.9% in the year to June, up from an annual 0.7% rise in April, the Office for National Statistics said.
The biggest increases were in the food products industry, textiles, clothes and leather goods.
Property tax threat is slowing down housing market, say UK agents
Speculation that the chancellor could announce new property taxes in her autumn budget is likely to slow down an already price-sensitive housing market, estate agents have said.Rachel Reeves is reportedly considering a tax on the sale of homes over £500,000 and the removal of the capital gains tax exemption on primary residences above £1.5m as ways to boost income for the government.The property website Zoopla said changes to the taxation of homes over £500,000 “may make some buyers consider a wait-and-see strategy. This covers those who may possibly save money on purchases under £500,000 and concern those buying over this level as well
Octopus Energy founder appointed as UK government adviser
Keir Starmer has appointed the outspoken founder of Octopus Energy as an adviser, with a remit to challenge government thinking.Greg Jackson has joined the Cabinet Office board, an influential core of government advisers, as a non-executive member.The announcement comes weeks after ministers ruled out his plan to split the national energy market into regional zones, which would have meant users in different areas would pay different rates for their electricity.The tech entrepreneur, who has long had links to the Labour party, responded to that decision by saying he would “respectfully disagree”.Jackson failed to win over ministers after a long and controversial campaign, in part because zonal pricing would have meant higher energy prices in the south-east of England and lower prices in Scotland
Nvidia sets fresh sales record amid fears of an AI bubble and Trump’s trade wars
Chipmaker Nvidia set a fresh sales record in the second quarter, surpassing Wall Street expectations for its artificial intelligence chips. But shares of the chip giant still dropped 2.3% in after hours trading, in a sign that investors’ worries of an AI bubble and the repercussions of Donald Trump’s trade wars are not quelled.Nvidia’s financial report was the first test of investor appetite since last week’s mass AI-stock selloff, when several tech stocks saw shares tumble last week amid growing questions over whether AI-driven companies are being overvalued.On Wednesday, Nvidia reported an adjusted earnings per share of $1
Teen killed himself after ‘months of encouragement from ChatGPT’, lawsuit claims
The makers of ChatGPT are changing the way it responds to users who show mental and emotional distress after legal action from the family of 16-year-old Adam Raine, who killed himself after months of conversations with the chatbot.Open AI admitted its systems could “fall short” and said it would install “stronger guardrails around sensitive content and risky behaviors” for users under 18.The $500bn (£372bn) San Francisco AI company said it would also introduce parental controls to allow parents “options to gain more insight into, and shape, how their teens use ChatGPT”, but has yet to provide details about how these would work.Adam, from California, killed himself in April after what his family’s lawyer called “months of encouragement from ChatGPT”. The teenager’s family is suing Open AI and its chief executive and co-founder, Sam Altman, alleging that the version of ChatGPT at that time, known as 4o, was “rushed to market … despite clear safety issues”
Olympic champion Jess Fox recovering after surgery to remove tumour in kidney
Australia’s three-time Olympic slalom canoe champion Jess Fox says she has had to deal with a “whirlwind” few weeks after undergoing surgery to remove a tumour from her kidney.The 31-year-old went under the knife last week in a successful procedure but she suffered some post-surgery complications and issued a statement on Thursday to say she was now recovering well.“It’s been a whirlwind over the last few weeks, but I’m all good – just a couple of gnarly new scars, a bit less kidney, and a whole lot more toughness,” Fox said. “I’m feeling positive and looking forward to heading home, focusing on recovery, and then building towards being back on the water again.”This article includes content provided by Instagram
Ostapenko and Townsend confront each other after US Open match: ‘She said I had no education’
Taylor Townsend and Jelena Ostapenko were involved in a heated exchange at the end of their second-round match on Wednesday at the US Open.The two met at the net for post-match handshakes after Townsend had completed a 7-5, 6-1 victory. But instead of heading to the locker rooms, they exchanged words and Ostapenko wagged her finger at her American opponent. The home crowd appeared to get behind Townsend and she approached the stands spurring them on as the noise rose on Court 11.After the match, Ostapenko said in an Instagram story that she had been unhappy with Townsend’s conduct before and during her victory
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