UK business growth hits five-month low amid budget uncertainty and weak demand – business live

The EU is no longer Donald Trump’s enemy, the US commerce secretary has told Ireland’s deputy prime minister, my colleague Lisa O’Carroll in Dublin reports.

Simon Harris told the Institute of International and European Affairs conference on trade that the attitude of Trump’s administration had significantly changed.

He had an hour long meeting with Howard Lutnick last week in the US and said there was “genuine satisfaction on the US that there is now a framework agreement” and there was now “certainly warmer language”.

“In fact it was said at our meeting that “Europe is not our foe, Europe is not the enemy”. Lutnick told him the two continents were “interdependent” economically, he said.

In the past Trump has expressed deep antipathy towards the European Union calling it “nastier than China” and “ a foe” because of “what they do to us in trade”.

EU trade commissioner Maroš Šefčovič is hoping the new warm relations will deliver a quick solution on the continuing 50% tariffs on steel which the European industry has said is crippling exports.

Also causing huge problems for EU exporters is the list of 407 steel derivative products now facing extra tariffs, from dishwashers to steel cutlery to tables with steel legs.

The EU is close to sealing a mandate from European leaders to start full-blown negotiations on a new agrif-food deal which will allow goods including British sausages and cheese into the single market with few trade barriers, the EU’s commissioner for trade Maros Sefcovic has revealed.

It is also close to agreeing the terms of permitting the UK, a non-EU member, to participate in bids for defence procurement in the bloc, as part of the SAFE programme to increase local military ammunitions capacity and reduce reliance on the US.

The potential agreements come four months after Keir Starmer and Ursula von der Leyen met in London to agree a framework to “reset” relations between the two sides with a plan to meet again next May.

While it has subsequently emerged that the deal could take up to 2027 to agree, sources close to the talks say they are keen “they have something to show” on removing the Brexit sanitary and phyto-sanitary (SPS) checks on food exports a “mid way” summit possibly in December.

Sefcovic, who is in Ireland to discuss the reset and attend a conference on trade, told reporters:

“I believe that very soon we will finalise our agreement of SAFE: this is how the UK can join the European public procurement for arguments.

“We are expecting that in coming weeks [that] we will have the mandate to negotiate an agreement on sanitary, sanitary standards, the SPS… I believe that we can negotiate this agreement very fast, because it would clearly reproduce quite a lot [of immediate benefits] on both sides trading of products.”

Talks are also closing in on electric trading system and a deal on carbon emissions trading.

Sefcovic says:

“These are technically extremely complicated issues, and I think that when we’ve been negotiating the trade and cooperations agreement, it was difficult to foresee how complex these issue are.. but you [we] want to restore high level of the cooperation.”

Newsflash: growth in the UK service sector has slowed to a five-month low, hit by budget uncertainty and weak demand from overseas, slowing the wider economy.

Services companies have reported that activity only rose marginally in September, deue to “sluggish demand conditions”, data firm S&P Global has reported.

Their latest poll of purchasing managers at British firms has found that “seak sales pipelines and pressure on margins from sharply rising staff costs” led companies to cut jobs again.

This pulled the S&P Global UK Services PMI Business Activity Index down sharply to just 50.8 in September, from August’s 16-month high of 54.2.

That puts the PMI index closer to the 50-point mark showing stagnation.

It’s also weaker than the ‘flash estimate’ of 51.9, which suggests growth weakened towards the end of September.

Tim Moore, economics director at S&P Global Market Intelligence, says:

“UK service providers experienced a disappointing end to the third quarter as weak consumer confidence, delays to business spending decisions and falling exports all weighed on demand. Business activity expansion hit a five-month low, while new order gains were much softer than the 11-month high seen in August.

Consequently, this summer’s acceleration in output growth is now looking like a flash in the pan as elevated political and economic uncertainty has reasserted itself as a constraint on service sector performance. Many survey respondents suggested that corporate clients had deferred spending decisions until after the Autumn Budget, while households were also hesitant about major purchases.

Outside of the UK, service providers were unable to escape challenging market conditions. Total new work from abroad returned to contraction territory in September. Lacklustre demand across Europe was a common theme reported by survey respondents.

Growth across the overall private sector also fell to a five-month low, with little expansion at all, after data earlier showed that UK manufacturing output shrank in September.

European stocks are on track for their strongest week since May after rising this morning.

The pan-European Stoxx 600 index has risen by 0.4% this morning to hit a new record high, and has now gained 2.8% this week. That would be its biggest monthly rise since late April, when markets were recovering from the initial shock of Donald Trump’s trade wars.

Investor still seem to be in optimistic mood, despite the US government shutdown and persistent warnings that market valuations have risen too high.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:

Valuations are high, and some investors wonder whether this is another tech bubble. But a bubble – by definition – isn’t a bubble until it bursts.

That leaves global investors with an unbearable FOMO – fear of missing out on a further rally – which keeps valuations elevated. Prospects of multiple Federal Reserve (Fed) rate cuts in the coming months also help support risk assets.

Back in the oil market, prices are rising after a fire broke out earlier today at Chevron’s El Segundo refinery in Los Angeles.

The refinery is one of the largest on the US West Coast; according to a county official, the flames had been confined to one area.

California governor Gavin Newsom’s press office posted on X:

“Our office is coordinating with local and state agencies to ... ensure public safety.”

Related: Large fire breaks out at el Segundo refinery in Los Angeles

Brent crude is now up 1% today at $64.71, suggesting concerns that the fire could disrupt supplies. But, it’s still on track for its biggest weekly fall since June.

Chevron have said that emergency responders from the city of El Segundo and Manhattan Beach are “actively responding to an isolated fire” inside the refinery.

Happily, the company has also said that “all refinery personnel and contractors have been accounted for and there are no injuries,” Reuters reports.

The boss of the pub chain Wetherspoon’s has vowed to keep price increases to a “minimum”, after blaming a beefed-up packaging tax and rising energy bills for extra costs.

Tim Martin said the recently introduced “extended producer responsibility” levy on packaging will lead to the company’s costs from the tax tripling from £800,000 to £2.4m a year.

Martin also criticised the impact of what he termed “non-commodity” energy costs – taxes or levies added to the pub chain’s bills for the electricity it uses – which he said will add £7m a year from this month.

More here:

Related: Wetherspoon’s boss vows to keep price rises to a minimum as he criticises energy bills

Today was due to be one of the more exciting days in the markets, with the publication of the latest US jobs report.

After two weak non-farm payroll reports in a row, September’s data would have given a good insight into whether the US labor market had continued to cool over the summer, as the Trump trade war hit the economy.

However, the US government shutdown means no official economic data is being released, so investors and news junkies will not get their NFP shot at 1.30pm UK time.

Democratic Senator Elizabeth Warren yesterday called for September’s jobs report to be released today, but there’s no sign yet that this will happen.

While that might make for a quieter Friday, it’s a blow to policymakers who are trying to read the economic runes. It could make it harder for America’s central bank, the Federal Reserve, to have confidence to keep cutting interest rates.

Stephen Innes, managing partner at SPI Asset Management, says the lack of jobs data, and inflation data, leaves the Fed trying to steer through fog with the radar switched off.

Innes adds:

For traders in Asia this morning and around the globe, the absence of NFP is a guilty relief—a rare first week Friday without the thunderclap risk of a headline payroll surprise.

The screens are quieter, the alerts still ping, but the heartbeats are slower. Some will take the early cut, step into the weekend before the next wave of OPEC headlines or AI hype rolls across the Pacific.

Others will watch the tape’s flicker and note the irony: when the market flies blind, risk can feel both safer and scarier at the same time.

Despite the downward pressure on the oil price in rcent months, drivers are facing rising prices at the pumps.

Motoring body the RAC has reported that petrol and diesel prices rose by around a penny a litre during September, even though crude prices were effectively flat during the month.

RAC Fuel Watch data shows that the average price of a litre of unleaded petrol went up from 134.64p to 135.41p (+0.77p) while diesel increased from 142.19p to 143.14p (+0.95p).

The RAC point out that fuel prices have risen in eight of the past 12 months but are still well below the highs seen in late February (when petrol hit a 12-month peak of 139.65p per litre).

RAC head of policy Simon Williams argues that price increases are unjustifiable:

“Sadly, pump prices crept up by a penny a litre in September reversing the drop drivers saw in August.

The fact prices have risen at all was made worse by the fact that there was little to no movement in the price of oil, or the pound-to-dollar exchange rate – the prime determiners of fuel prices – and therefore seemingly no justifiable reason for an increase.

Last week, the UK’s competition watchdog said it was “deeply concerned” by signs that companies have ramped up profits at the expense of consumers.

Related: UK retailers accused of ripping off motorists as fuel margins ‘remain far above historic levels’

Williams says:

“It was also disappointing to have the Competition and Markets Authority confirm what we have known for some time that retailer margins remain above historic levels. We’re grateful for this level of scrutiny, but it appears yet to have had the effect on retailer behaviour we’d hoped it would.

The comparison with average prices and margins in Northern Ireland makes the point that it is possible to sell fuel more cheaply and still make money.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The oil price is on track for its steepest weekly drop in three and a half months, as crude prices slide to a four-month low.

Predictions that the OPEC+ group will keep increasing oil output have pushed down energy prices in the last few days.

Brent crude, the international benchmark, has fallen 8% so far this week – from $70.13 per barrel last Friday night to $64.59 per barrel today, and yesterday hit its lowest level since 2 June.

OPEC+ are due to meet on Sunday, and could hike output further despite concerns that the oil market is already oversupplied.

Unicredit analysts says the alliance of oil producers is expected to approve a further 137,000b/d increase in output on Sunday.

This would extend “its gradual pivot from price defence to market-share expansion” Unicredit say, adding:

Talk of larger increases has surfaced, but these appear improbable. Quotas have risen by over 2.5mb/d since April, and Brent crude has largely hovered around USD 67/bbl in recent weeks, with geopolitical events – from Israeli strikes in Doha to Ukrainian drone attacks – having had only fleeting impacts on pricing. This suggests oil markets are predominantly shaped by structural dynamics.

Falling oil prices are boost for consumers, and many businesses, and might also reassure central bankers that inflationary pressures will ease.

JPMorgan analysts said in a note:

“We believe September marked a turning point, with the oil market now heading towards a sizeable surplus in Q4 2025 and into next year.”

The agenda

• 8.30am BST: UN FAO food price index

• 9am BST: Eurozone service sector PMI report for September

• 9.30am BST: UK service sector PMI report for September

• 9.30am BST: ONS: The impact of the motherhood penalty on monthly employee earnings and employment status in England

• 10.40am BST: ECB President Lagarde speaks at the Klaas Knot farewell symposium

• 2.20pm BST: Bank of England governor Andrew Bailey gives keynote speech at the Klaas Knott farewell symposium, ‘Macro-financial stability in a fragmenting world’