UK service sector activity slumps in one of sharpest declines for a decade

Key points

• Companies in the UK’s dominant services sector have reported one of the sharpest declines in business activity in a decade, according to a closely watched index.
• Businesses are grappling with a “perfect storm” of domestic political uncertainty around Keir Starmer’s leadership as prime minister and the growing impact of the Iran war, leading to soaring costs, supply shortages and job cuts, the report said.
• The S&P Global purchasing managers’ index (PMI), which surveys hundreds of companies across the UK each month, said activity among firms working in the services sector was the weakest since January 2021 and the lowest since July 2016 if the Covid pandemic period was excluded.
• The services sector, which ranges from hospitality and retail to finance and IT, accounts for about 80% of the UK economy, meaning its performance has a significant effect on GDP growth.
• The downturn affected the PMI’s “composite output index”, which scores...