UK service sector sees slower growth, drop in optimism

Optimism in the UK’s dominant services sector declined in the three months to August, according to the latest quarterly report from the Confederation of British Industry (CBI) released on Tuesday.

The Service Sector Survey showed that the pace of business volume growth slowed in the business and professional services sub-sector, and remained stable in consumer services.

However, optimism in both sub-sectors fell sharply. In business and professional services, it fell at the fastest pace in nearly five years (since November 2011), the CBI reported. In consumer services, optimism dropped at the fastest rate since the financial crisis (February 2009).

During the quarter, investment plans for the service sector as a whole were brought back into line with long-run averages, following a stronger start to 2016. Business and professional services firms expect to maintain investment spending on land and buildings, while spending on vehicles, plant & machinery will be scaled back over the next year. In consumer services, investment in land and buildings will continue to grow, but at a slower pace, while spending on vehicles, plant & machinery will be flat on the year. IT expenditure will continue to show robust growth.

The CBI found that employment growth in both sub-sectors remained above average in the three months to August, and was at the strongest level this year in consumer services, but is expected to slow over the next quarter.

Service sector firms continued to invest in their employees: growth in spending on training and retraining remained resilient in the three-month period.

Commenting on the findings, Anna Leach, head of economic analysis and surveys at the CBI, said:

‘Whilst the service sector has been rocked by the stormy waters of Brexit, especially when it comes to firms’ sense of optimism, the actual slowdown in growth on the office and shop floor has been relatively modest.

‘It’s encouraging that employment numbers have remained robust, especially in the consumer services sector. But looking ahead, the service sector faces a challenging environment in which to grow and invest, with uncertainty about demand weighing on firms’ minds.

‘To shore up confidence across the economy, the Government must clearly communicate plans for negotiations to leave the EU, and demonstrate its commitment to stimulating growth and driving investment with an ambitious Autumn Statement.’

British railways branded the worst in Europe

A study has revealed that Britain’s railways are the worst in Europe when it comes to affordability, efficiency and speed.

The union-commissioned report by think-tank Just Economics has revealed that the network trails behind countries including France, Germany, Spain and Italy.

Research found that the only area the UK performed better than the listed countries was for the frequency of trains.

In the UK a season ticket costs around 14p per kilometre whereas 8p per kilometre in Germany, France and Holland, which are the second most expensive countries.

In Britain day return tickets cost around 26p per kilometre and are almost twice as expensive when compared to the second most expensive country Switzerland where it costs 15p.

The report revealed that only Spain’s trains are more crowded than the UK’s in terms of ratio of passengers to seats.

According to the report: “In terms of bang for buck, not only does the UK come bottom of the index of outcomes but it also spends a relatively large amount of money to achieve this woeful result. This means that it also comes bottom of the value for money league.

“Our under-performing railways carry a considerable cost both for passengers and for the public purse.

“Our calculations show that a more affordable, more comfortable and faster railway would generate a staggering £324billion in social value (£9.2billion a year) between now and 2050. This is the equivalent of £7 of value per average journey in that period”.

Eilis Lawlor, the reports author said: “Our research puts figures on what anyone who has been to France or Spain already knows – the UK’s railways are poor value for money.

“The Government should act decisively and make an objective and transparent assessment of the best way to organise Britain’s railways so as to maximise social, environmental and economic value”.

A spokesman for the Department for Transport said: “We will shortly announce plans which will deliver a better value railway for the benefit of passengers, taxpayers and the wider economy. We hope unions will work with us on this”.