December 16, 2017
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UK Economy Slows After Shock Referendum

(Reuters)

 

Britain's economy appears to be shrinking at the fastest rate since the financial crisis in the wake of last month's Brexit vote, according to a business activity index that saw the biggest drop in its 20-year history. Julian Satterthwaite reports.

The UK economy looks to be wilting fast after June's Brexit vote. A key gauge of sentiment in private firms plunging at a record pace on Friday. The purchasing managers' index down from 52.3 to 47.4 in July for the service sector - the biggest drop in its 20 year history.

It's the first major piece of data produced since the June 23 vote. Survey compiler Markit say it points to a shrinking economy in the coming three months. Any blow to the service sector would be critical. It makes up about four fifths of the economy.

The property market certainly looking wobbly.

Demand for commercial property down by the largest amount on record, according to surveyors. In the housing market new buyer enquiries fell at their fastest pace since the global financial crisis. Asking prices also down more than usual in the summer, says online estate Right Move.

New numbers Friday from Hometrack pointing to an eight percent drop in home sales in the capital. No surprise to hear the country's new finance minister hinting at a hit to public finances. Chancellor Phillip Hammond, currently touring China, says he may have to reset the budget.

Now optimists hope the data will pick up after the shock of Brexit wears off. But all eyes are on the Bank of England. Friday's figures making an August rate cut look all but certain.