UK services sector growth accelerated towards the end of 2025 amid signs of confidence returning since the autumn budget, a new survey shows.
However, business activity growth remained “lackluster” last month, experts said.
S&P Global UK's services PMI survey had a reading of 51.4 in December, up from 51.3 in November.
Any reading above 50.0 means the sector is growing, while any score below means it is contracting.
However, the PMI survey, which economists are closely watching, was weaker than earlier estimates that had shown a “flash” reading of 52.1 for the month.
Respondents continued to report challenging conditions for businesses, with sales and customer spending held back by weaknesses in the UK economy and uncertainty over the political environment.
However, some businesses pointed to signs of returning confidence among their customers after a prolonged period of jitters in the run-up to the autumn budget.
This also resulted in a further rebound in the level of new jobs coming into companies, which was much faster than average in 2025.
The PMI survey incorporates responses from hundreds of companies in the UK services sector, including hospitality, entertainment and culture, finance and insurance, and property and business services.
Tim Moore, chief economic officer at S&P Global Market Intelligence, said activity growth was “mediocre” at the end of 2025.
But he added: “The modest growth in new incoming jobs was attributed to tentative signs of a recovery in customer confidence after a long period of pre-Budget pessimism.
“However, respondents still noted sales headwinds related to the UK's weak economic outlook, along with challenging operating conditions due to factors such as sharply rising trading costs and weak demand in key overseas markets.”
Staff numbers fell for the 15th consecutive month and the PMI revealed that many companies cited wage pressures and reduced margins as reasons for not replacing departing employees.
Matt Swannell, chief economic adviser at the EY Item Club, suggested some business problems eased after the autumn budget, which did not include the same degree of tax rises as in 2024.
“With the tax increases announced in the autumn budget towards the lower end of expectations, some businesses' pre-budget concerns have eased,” he said.
“But concerns about political stability remain.
“While few signals can be drawn from monthly PMI movements, it will likely be difficult for the UK economy to gain momentum over the course of this year.”
