UK government borrowing at record December figure; business activity in sharpest drop for two years – business live

LIVE – Updated at 09:53 Government borrowing surges to £27.4bn as debt interest jumps to £17.3bn, also the highest December figure on record, limiting the

chances of big budget giveaways. Sharpest drop in UK business activity for two years, but growth expectations rebound – PMI 09:53 A closely watched survey

points to the sharpest decline in UK business activity for two years, while growth expectations rebounded in the wake of reduced inflationary pressures. The composite

purchasing managers’ index (PMI) from S&P Global/CIPS fell to 47.8 in January, a 24-month low. Any reading below 50 indicates contraction; any reading above points to

expansion. This was because of a worsening in the dominant services sector, where activity was also at a two-year low, while manufacturing production decreased

considerably in January (index at 46.6), but the rate of contraction was the least marked since July 2022. The survey says: January data highlighted a

sustained downturn in UK private sector business activity. Although only modest, the overall rate of decline accelerated to its fastest for two years. Service providers

experienced a marked loss of momentum since December, with survey respondents citing higher interest rates and low consumer confidence as key factors that held back business

activity. Despite falling output volumes and weak demand, optimism regarding the year ahead outlook for business activity picked up in January and was the strongest since

May 2022. This improvement appeared to reflect hopes of a turnaround in global economic conditions and a further slowdown in cost pressures over the course of 2023.