UK services sector contracts amid US tariff uncertainty and domestic pressures
The UK’s services sector shrank in April for the first time in 17 months, as global uncertainty driven by Donald Trump’s tariff threats and rising domestic costs impacted new orders and business confidence, The Guardian said. The S&P Global Services Purchasing Managers’ Index (PMI) fell to 49.0 from 52.5 in March, the lowest since January 2023. A score below 50 signals contraction.
Export orders declined at the fastest pace since February 2021, while domestic service firms reported increased costs due to recent tax hikes. Businesses in technology and finance cited delayed investments due to rising global economic risks.
Consumer service providers, particularly in hospitality and leisure, struggled with passing on higher payroll costs following increases to the national living wage and national insurance contributions.
Trump’s tariff plans, including a proposed 100% duty on foreign films, have raised concerns about further disruptions. The Bank of England is expected to cut interest rates to 4.25% amid growing fears of a broader slowdown. Meanwhile, employment in the sector continued to decline for the seventh consecutive month.
The IMF recently downgraded the UK’s 2025 growth forecast to 1.1%, though still above France and Germany. Similar service sector slowdowns were observed in the eurozone and China.
