Firms across the UK’s private sector once again expect activity to fall in the next three months according to the CBI’s latest Growth Indicator, extending a run of negative predictions that began in late 2024.

The indicator published today said the downturn is expected to be broad-based, with business volumes in the services sector set to decline (-26%), driven by weak expectations in both business & professional services (-23%) and consumer services (-40%). In both sectors, predictions for growth are at their weakest in six months. Both distribution sales (-26%) and manufacturing output (-30%) are also expected to fall, the latter seeing the most negative expectations in almost a year.

The disappointing outlook comes as private sector activity fell in the three months to November (-35%), at the fastest pace since August 2020. All sub-sectors reported falling activity.

The CBI’s November surveys – which comprise this month’s Growth Indicator – were in field before the Budget.

It explained: “Private sector activity is once again expected to fall in the next three months, with expectations at their most negative in six months.

“The latest data extends a run of negative predictions for growth that has persisted since late 2024. Business volumes in the services sector are set to decline, driven by weak expectations in both business & professional services and consumer services volumes – in both sectors, expectations are also the most negative in six months.

“Distribution sales are expected to fall, alongside a sharper contraction in manufacturing output – the latter marks the weakest prediction over this year so far. Overall, the picture painted by our surveys is very similar to that which has persisted since the turn of the year.”

It warned: “The fragile outlook comes as private sector activity fell in the three months to November, at a broadly similar pace to the prior two months. All sub-sectors reported falling activity, with consumer services and manufacturing leading the fall.”

Alpesh Paleja, CBI deputy chief economist, said whie the outlook was negative, stability may well provide a much need precursor to growth.

“Growth expectations weakened in November, some of which may be down to jitters ahead of last week’s  Budget,” he added. “Businesses tell us that much of the month passed in limbo ahead of that, with big discretionary spending and investment on hold.

“However, this only compounded the headwinds to growth that have been apparent throughout the year: cautious spending behaviour by households and clients making demand conditions tepid, against a backdrop of persistent cost pressures for corporates.

“Stability is the precursor to growth. While last week’s Budget is likely to add further costs to businesses, notably with the addition of NICs to salary sacrifice pension contributions, the fiscal headroom created may provide some stability going forward.

“The government must now leverage enterprise expertise to unlock economic growth. This starts by applying the effective model of compromise and partnership achieved on the Employment Rights Bill, by collaborating directly with business to boost growth.”