Britain’s economy flatlined at the start of the year, according to new figures that showed a sharp slowdown in the dominant services sector in the run-up to Brexit.
Closely-watched monthly data for January suggested the UK was “at risk of stalling or worse” amid growing uncertainty over the departure from the EU as well as a wider global malaise.
The IHS Markit/CIPS UK services purchasing managers’ index (PMI) fell to a reading of 50.1 – only marginally above the 50-mark that separates growth from contraction.
That was down from 51.2 in December and the lowest reading since July 2016 – the month after the EU referendum.
The services sector – covering a huge range of businesses from law and accountancy firms to hotels, bars and restaurants – represents four-fifths of the UK’s economic output and led the country out of the last recession as other sectors such as manufacturing and construction struggled.
But January’s figures showed the first dip in employment numbers in the sector for the first time in over six years.
The report said that the slowdown was “overwhelmingly linked… to heightened political uncertainty at the start of 2019”.
It said that Brexit-related concerns “dampened client demand and resulted in delayed decision making on new projects”.
The report added: “Political uncertainty was the most commonly cited reason for lower new orders, with firms noting that Brexit concerns had led to more cautious spending among clients and risk aversion in relation to new projects.”
It comes after separate monthly data for the manufacturing and construction sectors also pointed to slowing growth.
Chris Williamson, chief business economist at IHS Markit, which compiles the survey, said the latest figures suggested the economy stagnated at the start of 2019, down from an estimated 0.1% growth in the final quarter of last year.
He said: “The latest PMI survey results indicate that the UK economy is at risk of stalling or worse as escalating Brexit uncertainty coincides with a wide slowdown in the global economy.”
The figures come ahead of the Bank of England’s inflation report on Thursday – its quarterly assessment of the UK economy and the last it will deliver before Brexit on 29 March.
(c) Sky News 2019: UK economy flatlines ahead of Brexit – survey