Pre-budget jitters lead to fall in professional and business services output
The latest Index of Services statistics show no output growth in the services sector (0.0%) in the three months to October 2025, with overall GDP falling by 0.1%, driven by pre-budget uncertainty.
The 1.6% decline in professional, scientific and technical (PST) activities, its biggest fall since 2012, was the main contributor to the lack of growth in the services sector. This was predominantly due to drops in scientific research and development (6.2%) and architectural and engineering activities; technical testing and analysis (3.0%).
The legal and accounting subsectors also saw a decrease of 0.5% and 1.1% respectively in the same period.
The ONS Monthly Business Survey turnover of services industries data shows a 3.1% increase in revenues for the three months to October 2025. Within this, professional services turnover fell 3% m/m in October. In line with the output data, this was largely driven by decreases in scientific research and development and architectural and engineering activities, which were only partly offset by legal and accounting revenues, up 8% and 4% respectively.
Chloe Austin, director and senior analyst in professional and business services at RSM UK, said: “October saw decreases across the board for output in the professional services sector, which was largely driven by pre-budget jitters prompting businesses to put a pause on activity. While the legal and accounting sectors saw an increase in turnover, against the fall in output, this again points to price inflation as opposed to real productivity gains.
“For legal in particular, revenues saw a 5.6% rise in the three-month period to October when compared to the previous year. This is impressive on the back of a 17% monthly decline in August and will likely fuel further private equity interest in the sector.
“Looking ahead, we’re likely to see more of the same in November’s data, as budget uncertainty and speculation really ramped up. The true impact of the budget announcements on business decisions will become clearer in the coming months. That said, there was some good news in the budget for professional services firms given there was no mention of National Insurance contributions extending to partners’ profits. However, tax changes around dividends and employee ownership trusts will require some firms to reassess their models and consider whether they remain appropriate for remuneration and succession planning.”