UK's services sector shrinks amid Trump tariff concerns

A 17-month period of expansion in the UK's services sector came to an abrupt end in April as uncertainty created by Donald Trump's tariff war hit new orders and exports.

- Phillip Inman

A poll of purchasing managers showed the US president's tariff campaign had sent a chill through the services sector, which accounts for about three-quarters of the UK economy, hitting business confidence about the prospects for the years ahead.

Services sector export sales were particularly subdued, with total new work from abroad decreasing at the fastest pace since February 2021, during the Covid pandemic.

Smaller domestic services companies also said the tax increases introduced by the chancellor, Rachel Reeves, were weighing on costs and had led to them laying off workers at a faster rate in April.

At 49.0 in April, down from 52.5 in March, the headline seasonally adjusted S&P Global UK services PMI business activity index was the lowest since January 2023. A score of more than 50.0 represents expansion.

"Survey respondents widely commented on risk aversion and delayed spending decisions among clients in response to rising global economic uncertainty," the report said.