Confidence has plunged across the UK’s services sector. Not because offices are shuttering, hospitals collapsing or customers disappearing into thin air. No, the crisis is defined by something else entirely: the inability to squeeze out enough profit. That’s what the CBI survey really records, not the health of services themselves but the health of margins.
We are told a “grim picture” is emerging. Grim for who? Certainly not for the workers whose wages have inched up after years of stagnation. Grim for business owners and lobbyists who live by the faith that profit should rise every year, whatever the cost.
The mechanics are simple: costs are going up, demand is flat, margins are squeezed. The consequence, according to the survey, is that firms pull back. They won’t hire, they won’t invest. It’s not that they can’t provide the service, it’s that they don’t want to unless it delivers more than it did last quarter. The expectation of endless expansion is what strangles growth before it starts.
Take wages. For most of us, a modest pay rise feels like survival. In the arithmetic of the CBI, though, higher employment costs are a burden, something to be trimmed away. What’s good for workers, for households, for basic social stability, is automatically translated into “pressure” when the yardstick is profit.
Then comes the familiar refrain about services being a “bellwether” for the wider economy. True enough in one sense (they make up three-quarters of GDP) but listen closely and you hear the real message. The bell doesn’t ring for whether needs are met, whether people are secure, whether businesses are actually functioning. It tolls only for profitability. A company that breaks even is not applauded for providing jobs and services; it’s condemned as part of a downturn.
The state plays along. The Bank of England is described as being pulled in two directions. Higher unemployment will trigger calls for a rate cut. Supposedly to “stimulate growth,” but in practice to make borrowing cheaper for firms. Inflation, meanwhile, must be punished with higher rates, not because families can’t pay their bills, but because inflation eats into margins. The Treasury and Bank are less stewards of social need than managers of the profit rate.
Business reporting reinforces the cycle. Confidence, outlook, resilience, read closely, these words all mean one thing: profit confidence, profit outlook, profit resilience. It is a closed language that normalises the idea that without expanding profits the economy is somehow broken.
The truth is harder. The services sector is not collapsing. It is being strangled by the demand that every quarter must deliver more than the last. That logic is notsustainable, not for firms, not for workers, not for the economy as a whole.
