Sluggish consumer spending is damaging the private sector, according to new CBI data that shows business volumes declining faster than in the last quarter. 

The CBI has projected that private sector activity will fall for a fourth consecutive quarter in the three months up to May, with a 23 per cent drop in activity for the services sector. 

The services sector is a particular dark spot, with the business group anticipating a 55 per cent fall in business volumes. 

Falling confidence has hit all sectors, with professional services down by 14 per cent whilst distribution sales have tumbled 24 per cent. 

This metric had hovered between flatline and decline since 2022 when Liz Truss unveiled her disastrous mini-budget.

Alpesh Paleja, the CBI’s deputy chief economist argued that there are bright spots in the data, particularly in the manufacturing sector – which saw a return to growth at 8 per cent. 

“But overall, the data still paints a picture of a tough operating environment for businesses, with consumer-facing sectors faring particularly badly,” Paleja added. 

The CBI hopes that a rise in real incomes by 2025 will boost consumer confidence and bolster struggling sectors. 

Paleja has urged the government to make interventions to support businesses, bringing in changes to the apprenticeship levy, more incentives for occupational health and rethinking business rates.

Businesses are under pressure from a £25bn employer national insurance hike and a 6.7 per cent minimum wage rise announced in the Chancellor Rachel Reeves’ budget in October. 

He warned that “more action is needed to rev up growth momentum”, with businesses looking to the government to bolster confidence while firms wait for the public to return to a healthier level of consumer spending.

“Further ahead, companies want to see an industrial strategy which offers the stability and certainty needed to drive innovation and investment, as well as fostering sustainable economic growth that benefits both businesses and households.”