Pace of growth falters amid worries about Budget

In September, the UK experienced a slight decline in economic growth, attributed to concerns surrounding the upcoming Budget. The PMI 'flash' composite output index, which serves as a key indicator of business activity, fell to 52.9 from 53.8 in August, missing the expected forecast of 53.5. Despite this drop, the index remains above the neutral level of 50, indicating that overall business activity is still expanding, albeit at a slower pace. The survey conducted by S&P Global, which included responses from 1,300 British firms, highlighted that many businesses are currently hesitant to make investment and recruitment decisions. This cautious approach is likely a response to the uncertainty surrounding fiscal policies and economic strategies that will be outlined in the forthcoming Budget. Analysts suggest that the decline in the index reflects 'jangling nerves' among businesses, which could lead to a slowdown in growth if the uncertainty persists. The data indicates that while there is still a sustained upturn in business activity, the momentum may be stalling due to these concerns. Rachel Reeves emphasized the importance of collaboration with businesses to ensure continued growth. The current economic climate calls for strategic planning and clear communication from policymakers to alleviate concerns and encourage investment, which is crucial for maintaining the positive trajectory of the UK economy.