Published by Global Banking and Finance Review
Posted on December 16, 2025
By William Schomberg
LONDON, Dec 16 (Reuters) - British businesses appear to be emerging from months of worry about tax increases in finance minister Rachel Reeves' budget in late November, a closely watched survey of the private sector showed on Tuesday.
The S&P Global Purchasing Managers' Index rose to 52.1 in its preliminary measure for December from 51.2 in November, above all forecasts in a Reuters poll of economists but still below its long-term average.
The improvement contrasted with a slowdown in a similar set of surveys for the euro zone.
The British PMI represented the first comprehensive gauge of the private sector since Reeves announced 26 billion pounds ($35 billion) in tax increases in her budget on November 26 but delayed the introduction of most of them and spared employers the kind of hit they took in her first budget last year.
"Firms seem reassured that the drag on demand will be less severe than feared, helped by most of the tightening being pushed down the line," Jake Finney, senior economist at PwC, said. "The one caveat is that job losses remain widespread, and it is unclear whether hiring will pick up now."
The value of the pound edged up against the dollar and the euro after the PMI was published. Government bond prices fell but there was no change to expectations among investors that the Bank of England will cut interest rates on Thursday.
SURVEY POINTS TO JUST 0.1% GDP GROWTH IN Q4
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey implied economic growth of only 0.1% in the fourth quarter.
"It's a big relief that business confidence has not slumped in a repeat of last year's post-budget gloom," Williamson said.
"However, the overall pace of output and demand growth remains lacklustre, and the expansion is still very dependent on technology and financial services activity, with many other parts of the economy struggling to grow or in decline."
The PMI's overall reading and one for the dominant services sector were both the highest in two months, while the measure of manufacturing was the strongest in 15 months.
New work grew at the fastest pace since October last year and the survey's measure of expectations for the 12 months ahead rose to its second-highest level in more than a year albeit still below the long-term average.
New work from abroad rose after falling for 13 months and backlogs edged up for the first time in almost three years as suppliers struggled to respond to the pickup in demand.
BUSINESSES KEEP CUTTING STAFF, JOB MARKET WEAK
But staffing levels were cut again as employers responded to the higher costs of hiring which went up earlier in April due to a tax increase ordered by Reeves.
Earlier on Tuesday, official data showed the jobs market weakened with the jobless rate hitting its highest since 2021, payrolled employment falling and private-sector wage growth rising at the slowest pace in almost five years.
Inflation pressures increased in the PMI with the prices of inputs - including labour costs - accelerating for the second month in a row while prices charged by firms also went up after touching a five-year low in November.
($1 = 0.7460 pounds)
(Writing by William Schomberg; Editing by Hugh Lawson)
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