Services Sector Sales at Two-year Low
Sales in the UK services sector fell at the fastest rate since November 2009 in the three months to August, research by the Confederation of British Industry (CBI) has found.
The CBI’s latest quarterly report found that spending on business and professional services — which cover the accountancy, legal and marketing sectors — dropped sharply in the three months to mid-August this year. This was the fastest quarterly drop since November 2009 when the economy was in full recession.
Consumer-facing businesses such as hotels and restaurants have fared little better, with the sector as a whole seeing an ongoing decline in business volumes because of high inflation and pressure on household incomes, the CBI said.
CBI head of fiscal policy Richard Woolhouse said the figures were worse than expected.
“This quarter we’ve seen more evidence of the ongoing decline in consumer services spending, as people with increasingly squeezed household incomes are forced to cut back their discretionary spending.”
“What is new, and was not expected this quarter, is that spending on business and professional services also fell.”
Phil Sullivan, network operations director at accountancy network Tax Assist Accountants, which works largely with small businesses, admitted the current market was tough.
“Smaller firms are often reluctant to spend money on accountancy services.”
“Many businesses are finding it difficult to generate working capital, and coupled with the banks’ unwillingness to lend, this means things are quite flat. Clients are disappearing, often because the business hasn’t succeeded or the owner has chosen to go back into paid employment.”
“From a commercial point of view, that means we have to come up with new creative ways to win new business. We’re investing more in web-based advertising such as Google and other local search engines, in order to target local small firms.”