• UK Private Sector Growth Slows Amid Rising Interest Rates, Survey Shows
• Plans To Close Rail Ticket Offices
• Customers Will Not Pay For Thames Water Failures
A recent survey has revealed a sharp slowdown in the growth of Britain’s private sector last month, despite businesses benefiting from lower inflation. The survey, conducted by S&P Global/CIPS, indicates that higher Bank of England interest rates have weighed on demand, resulting in a significant decline in the services Purchasing Managers’ Index (PMI).
The June PMI for the UK services sector dropped to 53.7 from May’s 55.2, aligning with the preliminary estimate. While still comfortably above the 50 level, which separates growth from contraction, it represents the sector’s lowest reading since March and the most substantial month-on-month fall since August 2022. The composite PMI, including manufacturing data, also reached a three-month low of 52.8, in line with the initial estimate.
According to Tim Moore, economics director at S&P Global Market Intelligence, the service sector displayed signs of fragility in June due to rising interest rates and concerns about the UK’s economic outlook, leading to a toll on customer demand. Particularly affected were services related to construction and real estate.
The unexpected increase in the Bank of England’s main interest rate from 4.5% to 5% last month, the highest since 2008, was a contributing factor. Inflation remained at 8.7% in May, and Governor Andrew Bailey expressed concerns that inflation may be slow to moderate.
In other news, the boss of regulator Ofwat, David Black, stated that customers would not bear the cost if Thames Water faced financial difficulties. He emphasised that the firm had time to raise the necessary funds to address its financial challenges. Thames Water, burdened by significant debt, faces the possibility of government intervention if it fails to turn things around.
Meanwhile, train companies in England are planning to proceed with the closure of numerous ticket offices. Industry leaders are expected to announce a public consultation on the gradual closures of hundreds of ticket kiosks over the next three years. Although some ticket offices will remain in larger stations, staff will primarily be positioned on concourses to sell tickets, offer travel advice, and assist with accessibility. Rail unions have voiced opposition to the plans and have warned of potential strikes.
The Rail Delivery Group (RDG), representing train companies, initiated the consultation after failing to reach an agreement with the RMT union. The RDG argues that only 12% of tickets are currently sold at station kiosks on average, compared to 85% in 1995, as more passengers now opt to purchase tickets online or through machines. The industry body believes these changes will enable staff to provide more direct assistance to passengers, moving away from traditional station office setups.
