LONDON, November 21, 2025 – UK business growth slowed sharply in November, as companies held off investment and expansion plans ahead of Finance Minister Rachel Reeves’ budget, reflecting concerns over potential tax increases and economic uncertainty.

The S&P Global Purchasing Managers’ Index (PMI) composite flash reading, which tracks output in the services and manufacturing sectors, fell to 50.5 in November from 52.2 in October, just above the neutral 50 threshold. The decline was below all economists’ forecasts in a Reuters poll, signaling that UK economic expansion is stalling.

Private Sector Pauses Investment

Chris Williamson, Chief Business Economist at S&P, commented:
“There’s a real chance this pause may turn into a downturn … largely linked to speculation that further demand-dampening measures will be introduced in the Budget.”

The survey showed private-sector employment fell at the fastest pace in four months, while prices charged by businesses rose by the smallest amount since December 2020, potentially influencing the Bank of England’s interest rate decisions next month.

The services PMI, which represents the bulk of the economy, declined to 50.5 from 52.3 as new business fell for the first time since July. In contrast, the manufacturing PMI showed modest growth for the first time since September 2024, rising slightly to 50.2 from 49.7.

Budget Concerns Weigh on Business Confidence

Finance Minister Rachel Reeves, whose first annual budget last year included the largest tax hike since 1993, is expected to raise an additional £20-30 billion ($26-$39 billion) this year due to a projected growth downgrade, higher borrowing costs, and challenges in passing welfare cuts through Parliament.

Businesses are wary that the budget could break Labour’s election promises, particularly regarding income tax increases, prompting companies to delay spending and hiring decisions. The PMI results suggest that output may remain flat in November and expand only 0.1% in Q4 2025, matching the third quarter’s weak growth.

Implications for the UK Economy

The survey highlights sluggish economic momentum ahead of the budget announcement on November 26, with potential ripple effects on private investment, employment, and consumer spending. Analysts warn that if the government implements demand-dampening measures, it could tip the UK economy into contraction, reinforcing pressure on policymakers to balance fiscal consolidation with growth support.