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Recession fear as Brexit blamed for services sector slump

by ace
Visitors admire St Paul's Cathedral from the restaurant of the Tate Modern March 2007

The UK economy appears to have fallen into recession according to closely watched research showing that the dominant services sector shrank last month amid Brexit uncertainty.

The September IHS Markit / CIPS Purchasing Manager Index (PMI) figures add a gloomy picture of Britain's third quarter performance, indicating that GDP shrank by 0.1% over the period.

If confirmed by official figures published next month, it would mean that the UK suffered two consecutive quarters of contraction – the definition of recession.

The broad service sector – spanning a range of businesses, from law firms and accountants to travel agents and restaurants – accounts for 80% of UK economic output.

The September 49.5 PMI reading – where the 50 mark separates expansion from contraction – increases readings earlier this week, suggesting that the manufacturing and construction sectors have also shrunk.

It is the first month in which the three main parts of the economy have declined since 2009 – except July 2016, the month after the Brexit referendum.

The survey pointed out that the imminent deadline for Britain to leave the EU is behind the latest crisis.

Chris Williamson, chief business economist at IHS Markit, who compiles the figures, said: "Concerns about Brexit dominated the survey responses, linked by companies to falling sales, canceled and postponed projects, lack of investment and loss of business. jobs ".

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