Firms across the private sector once again expect activity to fall in the next three months, according to the Confederation of British Industry’s latest Growth Indicator.

Nonetheless this pessimism – suggesting a weighted balance of -20 per cent – has eased somewhat, with growth expectations at their least negative in three months.

The downturn in activity is expected to be broad-based, with business volumes in the services sector set to decline (-16 per cent) – driven by subdued expectations in business and professional services (-11 per cent) and a bleak outlook for consumer services (-38 per cent) volumes.

Distribution sales are also expected to fall in the three months to April (-37 per cent), and manufacturers anticipate another modest fall in output (-14 per cent). However, negative expectations for manufacturers did ease for a second month running.

This disappointing outlook comes as private sector activity fell in the three months to January (-33 per cent, broadly unchanged in the three months to December). All sub-sectors reported falling activity.

CBI Deputy Chief Economist Alpesh Paleja said: “The UK economy has not experienced a strong start to 2026. While there are tentative signs of stabilisation and resilience in some specific areas, the big picture remains similar to much of last year: businesses remain cautious, households are downtrading and confidence is still fragile. Recent geopolitical tensions will only have added to uncertainty at the margin.

“Worryingly, our latest surveys show that persistently weak growth expectations are now accompanied by an uptick in price pressures – at a time when inflation is already uncomfortably high. That combination risks a further squeezing of margins and dampening of investment, just when the economy needs momentum.

“If the government wants to shift the dial, it must focus on the fundamentals of competitiveness. That means lowering the cost of doing business, starting with decisive action on energy costs and streamlining regulation to give firms the confidence to invest. Clear signals and rapid progress on these fronts would provide an immediate boost to business confidence and help turn tentative stabilisation into sustainable growth.”