Published by Global Banking and Finance Review
Posted on December 8, 2025
By David Milliken
LONDON (Reuters) -British business growth ground almost to a halt this month, as companies put their plans on hold while they waited to see if next week's government budget will raise the tax burden for a second year running, according to a major survey.
The S&P Global Purchasing Managers' Index composite flash measure - a preliminary reading for the services and manufacturing sectors - dropped to 50.5 in November from 52.2 in October, barely above the 50 no-change mark.
The reading was below all economists' forecasts in a Reuters poll, and S&P said the slowdown suggested output would be flat in November and expand just 0.1% in the final quarter of 2025, matching the third quarter's weak growth.
"There's a real chance this pause may turn into a downturn ... largely linked to speculation that further demand-dampening measures will be introduced in the Budget," S&P Chief Business Economist Chris Williamson said.
Finance minister Rachel Reeves raised taxes by the most since 1993 in her first annual budget last year, with businesses bearing the brunt through higher payroll taxes.
This year, Reeves is expected to need to raise a further 20 billion-30 billion pounds ($26 billion-$39 billion) due to an expected growth downgrade from the government's budget watchdog as well as higher borrowing costs and an inability to pass planned welfare cuts through parliament.
For much of the survey period, Reeves had indicated she was likely to break Labour's election promises and raise the main rate of income tax for the first time since the 1970s, although now she appears to favour a string of smaller measures.
The PMI showed private-sector employment fell at the fastest pace in four months, while prices charged by businesses rose by the smallest amount since December 2020, likely boosting the chances the Bank of England will cut interest rates next month.
The services PMI, which accounts for the bulk of the economy, dropped to 50.5 from 52.3 after new business fell for the first time since July, while the manufacturing PMI showed growth for the first time since September 2024, edging up to 50.2 from 49.7.
($1 = 0.7643 pounds)
(Reporting by David Milliken; Editing by Toby Chopra)
