Trouble ahead of Britain after EU exit vote
The British economy has shrunk at its fastest rate since April 2009 -- the peak of the 2007-08 financial crisis – following the vote to leave the European Union (EU), according to a business survey.
Speaking in China on Friday, Philip Hammond, the new UK Chancellor of the Exchequer, said the report showed the Brexit vote had damaged confidence and caused a period of economic uncertainty.
The first survey of business activity since the June 23 referendum shows that the services sector is particularly hit hard. It also suggests that UK GDP could shrink by 0.4 percent in the third quarter as manufacturing has dropped to its lowest level since February 2013.
Data from IHS Markit's Purchasing Managers' Index (PMI) shows the composite index – which measures both services and manufacturing – dropped from 52.4 in June to 47.7 in July, a seven-year low. A reading below 50 indicates contraction.
Chris Williamson, chief economist at IHS Markit, said the downturn has been "most commonly attributed in one way or another to 'Brexit'. Given the record slump in service sector business expectations, the suggestion is that there is further pain to come in the short-term at least,” he warned.
Chancellor Hammond said the PMI survey showed that the Brexit vote has damaged business confidence.
Membership of the EU has been a controversial issue in the UK since the country joined the then European Economic Community in 1973.
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