London, United Kingdom. British business activity expanded for a second month in February, but services firms reported sharp job cuts partly linked to higher taxes, according to a survey.
Composite PMI rises to highest since April 2024
The S&P Global UK Composite Purchasing Managers’ Index rose to 53.9 in a preliminary February report from 53.7 in January, its highest level since April 2024. Readings above 50.0 indicate growth in activity, while those below point to contraction.
“The early PMI data for February bring further signs of an encouraging start to the year for the UK economy,” said Chris Williamson, S&P Global chief business economist.
Growth estimate for early 2026
Williamson said the January and February surveys, which echoed other signs of a pickup among businesses and consumers after uncertainty ahead of finance minister Rachel Reeves’ budget in late November, were consistent with economic growth of about 0.3% in the first quarter of 2026. That would compare with an expansion of 0.1% in the last quarter of 2025.
Bank of England outlook and pricing signals
Williamson said Bank of England policymakers would be encouraged by indications of stronger growth, but that relatively modest price pressures and labour market weakness could increase calls for further interest rate cuts.
Investors are largely expecting the BoE to resume cuts to borrowing costs in March, supported by signs of slowing inflation and a greater focus on weakness in the jobs market.
Prices charged by businesses rose at the fastest pace since last April, while cost burdens, though still high, increased at the slowest pace in three months.
Services staffing falls as taxes rise
Staffing levels fell particularly sharply among services firms, with some reporting redundancies or hiring freezes. Companies cited higher social security payments introduced by Reeves in April 2025.
How do you think the combination of stronger activity and job cuts will affect UK economic growth in 2026?