New Data has indicated that the UK economy is really struggling due to Britain’s vote to leave the EU.
The pound has fallen after additional claims the economy could contract by 0.4% in the third quarter of 2016.
Data from Markit’s Purchasing Manager’s Index (PMI) shows a “dramatic deterioration,” in the economy. These levels have not been seen since the banking crisis, which saw the Government step in to save a number of the United Kingdom’s major banks.
The PMI indicates a fall to 47.7 in July, the lowest level since April in 2009. A reading below 50 indicates contraction.
The data comes from a report of 650 companies from various business sectors. There was a decline in manufacturing and service sectors. On the bright side exports have picked up due to the weakness of the pound, but that is also making foreign travel more costly.
Chris Williamson, chief economist at 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.”
The distressing figures, which will unsettle man across the UK wether they voted to stay in the UK or not, come just after the UK’s new chancellor, Philip Hammond, said he might have to “reset” Britain’s economic policy.
Mr Hammond said: “Over the medium term we will have the opportunity with our Autumn Statement, our regular late year fiscal event, to reset fiscal policy if we deem it necessary to do so in the light of the data that will emerge over the coming months.”
This is bad news for the UK but it could be boosting the rest of the EU countries Joshua Mahony, Market Analyst at IG said: “Today has shown a stark contrast between Eurozone and UK economic fortunes in the wake of the EU referendum, with the negative impact felt after the vote largely isolated to the UK.
“There is perhaps a feeling amongst the likes of France and German that the vote is a case of the UK shooting itself in the foot, with a significant amount of business expected to leave the UK in favour of Frankfurt, Paris and Dublin.
“There is no surprise that the eurozone services PMI readings have shown particular strength, with the French services sector taking on extra staff to the greatest extent since 2008 as UK based firms look to become less London centric.”