Imagine trying to steer a ship through rough waters—now imagine doing that with rising fuel costs and a leaky hull.
That’s a bit like what UK businesses are facing this April.
A key economic indicator just came out, and the numbers aren’t painting a pretty picture.
The flash PMI (Purchasing Managers’ Index), which gives an early sense of how the economy is performing, showed the sharpest slowdown in over two years.
Business Activity Shrinks Under Global and Local Pressure
According to the latest figures, business activity has dipped considerably.
The S&P Global composite index fell to 48.2 in April, down from 51.5 the previous month.
Since any reading below 50 suggests a contraction, this marks a worrying shift.
Economists were expecting a milder dip to 50.5—but the actual number suggests the economy could shrink by around 0.3% this quarter.
What’s behind this slowdown? A mix of things.
International trade tensions, especially from US tariffs introduced under Donald Trump, are still lingering.
At the same time, changes at home—like Labour’s increase to National Insurance—are hitting businesses right where it hurts.
Government Finances Under the Microscope
As if that wasn’t enough, new public finance data is adding to the pressure.
Public sector borrowing is running much higher than expected, and that’s raised fresh fears that the Chancellor may need to raise taxes or slash spending to keep the government’s budget in check.
Rachel Reeves, the UK Chancellor, is currently in Washington, trying to hash out a trade deal with the US during IMF meetings.
The goal? To ease those burdensome tariffs that are weighing down British exports.
Exports Slump, Jobs Cut, and Confidence Falters
The PMI report wasn’t just gloomy on growth—it showed job losses too.
Businesses across both manufacturing and services reported cutting staff for the seventh straight month.
Exports are falling at the fastest rate since 2020, when lockdowns brought global trade to a crawl.
It’s clear that weakening demand from overseas is dragging down performance at home.
Worse yet, confidence about the year ahead has dropped to levels not seen since October 2022.
Many companies say that economic uncertainty, particularly surrounding international trade, is making it hard to plan ahead or invest in growth.
Manufacturing Feels the Brunt
The manufacturing sector, in particular, is taking a hit.
Production has now dropped for six consecutive months, and April’s decline was the worst since August 2022.
The cost of doing business is climbing too, especially after the latest National Insurance and minimum wage increases, putting even more strain on employers already struggling with weak demand.
Expert Warning: The Economy Is on Thin Ice
Chris Williamson, chief business economist at S&P Global, didn’t sugarcoat it.
He called the level of job cutting “aggressive” and said the UK economy has moved from “treading water” to actively struggling.
According to him, this month’s data signals the steepest drop in output in two and a half years.
He also highlighted two key pain points: falling export orders and rising costs for businesses.
Combined, they’re pushing many companies closer to the edge.
What Comes Next?
So, what does this mean for the UK moving forward?
Pressure is mounting on the Bank of England to consider lowering interest rates at its next meeting in May.
With shrinking output, job cuts, and plummeting business confidence, many are asking whether the current policy approach is working—or if it’s time for a serious course correction.