Britain’s economy was reported to have contracted at the fastest rate since the 2009 peak of the financial crisis.
The Markit survey, the first to measure business activity since the Brexit vote, found that the services sector in particular but also manufacturing declined.
Chris Williamson, the 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.”
He said the survey indicated that Britain’s economy could drop by 0.4% in the third quarter, although much depends on performance in July and August.
Chancellor Philip Hammond told Sky News that the report showed that the Brexit vote has damaged sentiment.
“It tells us that people’s confidence, businesses’ confidence has been dented. They’re not sure, there’re in a position of uncertainty now,” said Hammond, after meeting with Chinese policymakers in Beijing.
“Our job is to restore as much certainty as we can, as quickly as we can.”
Analysts are waiting to see if the Bank of England will implement additional quantitative easing stimulus or cut interest rates should the remaining months of the third quarter show further decline.
Meanwhile, the European Central Bank said it will wait for at least six more weeks before taking a decision on additional stimulus measures to boost growth in the eurozone.
ECB president Mario Draghi said the Bank will monitor and assess the eurozone economy and the impact of Brexit.
The existing programme allows the purchase of €80bn of assets a month which is set to continue. Draghi noted that the ECB would, however, adopt all the “instruments available within its mandate” to help the eurozone economy if needed.
Comments
The signs that I see as an expat in Portugal are all negative. In particular the value of my pension paid in sterling has declined, and there are continuing concerns over the status of British expats living in the EU after Brexit has taken place. Is Dave Williams living on a parallel planet?
Certainly there will be residual concerns as there are thousands of EU citizen owned businesses in the UK. Many branches of mainland European companies or tightly meshed in supply chains so carrying their Head Office concerns.
Commonsense tells us that a cheaper pound can only help sell British products into Europe and that this will, in the final analysis to an existing customer, be the deciding factor. The northern EU will continue to identify with us and buy from us.