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\t\tThe services sector’s economic activity has declined following the conflict\t<\/p>\n\t\t\tMonday 08 June 2026 5:30 am
\n\t\t\t\t\t\u00a0|\u00a0\u00a0Updated:\u00a0<\/p>\n
\t\t\tSunday 07 June 2026 4:49 pm\n\t<\/p>\n
\t\tThe services sector’s economic activity has declined following the conflict\t<\/p>\n
The UK\u2019s services sector\u2019s economic activity and performance declined sharply last month as fallout from the Iran conflict continues to impact businesses, according to new figures.<\/p>\n
According to data on the latest business trends from accountancy and advisory firm BDO, a drop in sales and fragile client confidence led to a drop in the services sector<\/a>\u2018s economic activity \u2013 which includes financial and professional services, retail, hospitality and leisure, and health and education. <\/p>\n The crash, BDO said, is \u201cpushing business output and optimism to new multi-year lows as continued conflict in the Middle East weighed on the UK economy.\u201d <\/p>\n The sharp drop in economic activity last month reached its lowest point since the UK emerged from the country\u2019s third national lockdown<\/a> in 2021. <\/p>\n BDO said a slowdown and decline in activity in particular in the hospitality, travel, and leisure industries, is \u201clikely due to delayed spending decisions around travel and broader cuts to discretionary spending as the current climate squeezes real wage growth.\u201d<\/p>\n A drop in business confidence, as surveyed by the advisory firm, shows \u201cpersistent fragility\u201d for the services sector. <\/p>\n The firm<\/a> added that this \u201creflects a gloomy economic outlook as the prospect of rising prices stemming from the Middle East conflict weighs on weak growth and prolonged geopolitical uncertainty.\u201d<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tUK businesses stall investments and cut headcount due to Iran war\u00a0<\/a><\/p>\n This reverses an uptick in economic activity last month, which BDO said may have been due to businesses likely pre-paying for orders as they faced economic uncertainty.<\/p>\n \u201cAs expected, the signs of a short-term recovery in April were not a true reflection of the state of the economy,\u201d Scott Knight, head of strategy at BDO said. <\/p>\n \u201cAs the impact of ongoing conflicts and domestic uncertainty filters through, businesses, particularly those in the services sector, are bracing for further cost pressures. Hopes for growth are dimming,\u201d Knight said. <\/p>\n BDO data on hiring intentions, headcount, and labour demand, also fell \u2013 reaching a new low in 15 years \u2013 with the services sector contributing to the decline. <\/p>\n Sharp decline marks Brexit anniversary <\/p>\n