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UK business services profits down by most in eight years - CBI

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By Reuters
UK business services profits down by most in eight years - CBI
FILE PHOTO: A sailing boat moves past the Canary Wharf financial district on the River Thames in London, Britain August 11, 2019. REUTERS/Simon Dawson   -   Copyright  SIMON DAWSON(Reuters)

LONDON (Reuters) – Profits at British professional and business services firms dropped by the most since 2011 for a second quarter running and businesses are cutting back on investment, the Confederation of British Industry said on Thursday.

CBI surveys have regularly painted a downbeat picture of Britain’s economy as businesses face political uncertainty created by Brexit and, more recently, a national election on Dec. 12.

“The current economic climate is holding back UK services firms, which are reporting falling sentiment, declining volumes and weaker profitability. Neither is the outlook expected to improve,” CBI chief economist Rain Newton-Smith said.

The professional and business services profitability gauge held at August’s level of -25, the lowest since November 2011, while plans to invest in vehicles, plant and machinery were the weakest since 2010.

Overall optimism for consumer services firms fell again albeit at a slightly slower pace of -25 in November compared with -28 in August, while for business and professional services companies it picked up to -20 from -31.

Britain’s services sector accounts for about 80% of the economy which grew by 1.0% year-on-year in the third quarter of 2019, the weakest since early 2010, official figures showed earlier this month.

The services sector grew 1.4%, but depended more on government spending than at any time since early 2013.

The CBI’s survey was based on responses from 179 business and professional services firms and 62 consumer service firms between Oct. 29 and Nov. 13.

(Reporting by David Milliken; Editing by William Schomberg)