The vote to leave the European Union has already caused a “record slump in service sector business expectations” with “further pain to come”, according to financial analysts.
The latest report from IHS Markit shows a contraction in the UK economy with the Purchasing Manager’s Index (PMI) at the lowest level since the financial crash in 2008/9.
Businesses in both the manufacturing and service sectors reported a decline in output and orders.
The report surveyed more than 650 services companies, from a variety of sectors across the UK economy, including transport, business services, computing, and restaurants.
Chris Williamson, Chief Economist at Markit, said:
“July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009.
“The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to ‘Brexit’.”
Williamson went on to say that the survey signals a 0.4% decline in the economy for the third quarter with “further pain to come in the short-term at least”.
David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply, commented
“The UK economy has suffered sharp falls in output and new orders following the EU referendum as uncertainty has taken hold. The overall pace of decline was the strongest since early-2009…The true extent of the impact of this uncertainty still remains to be seen next month. But with optimism in the UK’s service sector at a seven-and-a-half year low, policymakers must take swift action to stop further decline amid political upheaval.”
Financial analysts were almost unanimous in warning that Brexit would cause significant trouble for the UK economy, but the Leave campaigns led by Boris Johnson, Michael Gove, and Nigel Farage dismissed the warnings, instead claiming that “people in this country have had enough of experts”.