The biggest downturn since January 2021 hit British services companies last month, although it was not as severe as first estimated, according to a business survey that underlined the tough times ahead for the economy.

The final version of the S&P Global UK Services Purchasing Managers’ Index (PMI) fell to 48.8 in October, slipping below the 50.0 threshold for growth where the index sat in September.

While better than an initial “flash” reading of 47.5, it marked the biggest contraction in business activity since the start of 2021 when COVID-19 lockdowns stifled the economy.

Overall, the PMI chimed with other leading indicators of Britain’s economy that point to a worsening slowdown underway – something that is likely to concern Bank of England officials who look set to raise interest rates sharply on Thursday.

Britain’s economy is on the cusp of a recession as households and businesses wrestle with rising energy costs, a jump in borrowing costs and volatile financial markets.

Services firms in other major European economies are also struggling.

“Household spending cutbacks and shrinking business investment combined to dent new order volumes,” said Tim Moore, economics director at S&P Global Market Intelligence.

“A number of firms noted that political uncertainty and rising borrowing costs since the mini-Budget had led to greater risk aversion among clients and a wait-and-see approach to new projects.”

The economic agenda of former Prime Minister Liz Truss, announced on Sept. 23, triggered a crash in British financial assets with the effects still being felt despite a U-turn on those policies by Truss’s successor, Rishi Sunak.

There were some bright spots in Thursday’s survey: Employment in the services sector continued to expand, and cost pressures eased a little.

But optimism about future business activity drained away last month.

“Aside from the slump at the start of the pandemic, the degree of confidence across the service economy is now the lowest since December 2008,” Moore said.

The composite PMI, which combines Thursday’s survey with the manufacturing PMI published on Tuesday, fell to 48.2 in October from 49.1, the lowest reading since January 2021 but up from the flash figure of 47.2.