WILL THE BOE ADOPT A RESTRICTIVE MONETARY POLICY AS EARLY AS JUNE? 2/3

The latest PMI surveys confirm that UK business activity has stalled as the compiled leading indicators slide toward contraction. The services PMI plummeted to 49.3, a near-reversal of early-year resilience, driven down by rising labor costs and a freeze on hiring following increased employer tax contributions. Paradoxically, the manufacturing PMI surprised with a rise to 53.9, while the construction sector collapsed to a dismal 38.2. Order books are emptying rapidly across the broader economy. Purchasing managers' metrics signal a severe recession risk for the coming quarters of 2026.