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Britain’s private sector barely expanded last month, according to surveys, recording the lowest business activity since October 2023, as firms in the dominant services laid off staff at the fastest rate since January 2021, when a Covid lockdown was in force.

The final reading for the composite PMI (which includes manufacturing and services), from S&P Global, shows that the main business activity index fell to 50.4 in December from 50.5 in November, the lowest since October 2023 and barely above the 50 mark that separates expansion from contraction. It is slightly below the flash estimate of 50.5.

The service sector ended last year with only a marginal upturn in business activity and a near-stalling of incoming new work. Survey respondents suggested that falling business and consumer confidence, largely due to worries about domestic economic prospects in 2025, had led to a considerable loss of growth momentum. While most parts of the UK service economy noted weak demand and cutbacks to client budgets, there remained pockets of strong growth in areas such as technology services.

A post-Budget slump in business optimism persisted in December, with output growth expectations for the year ahead unchanged from November’s 23-month low. Concerns about the impact of rising payroll costs, alongside a general unease about the climate for business investment, were reported as the main factors weighing on prospects for growth in 2025.