New data has come to light that indicates that businesses in the South East and London have suffered the most since the decision to leave the European Union.
Companies in the region have had a negative impact on the service and manufacturing sectors. Output has contracted for the first time in almost four years as the uncertainty of what will happen in a post-Brexit UK has decreased demand. It appears business are very cautious about investing when they have no idea where the economy could be and how legislation might change in the coming years.
The PMI (purchasing managers’ index) which is a survey carried out by Lloyds Baking Group, found that the majority of the UK regions felt a reduction in business activity in July.
Output in England fell from 52.5 in June down to 47.4 in July the lowest figure since back in April 2009. If the index sees a fall under 50 then that shows a contraction, and will increase fears of a recession.
However, the economic powerhouse of London and the South East in general were damaged the most, with the capital hitting 44.4 and the rest of the South East slightly higher at 45.5. Output in these two economically essential areas has not contracted since back in 2012.
Only the East of England and the East Midlands maintained positive growth, at 51 and 50.9 respectively.
Tim Hinton, managing director for mid-markets and SME banking at Lloyds Banking Group, said: “UK firms will likely face challenges in the short-term but the Bank of England’s decision to cut interest rates could help crystallise important investment decisions and in turn support the economy.”
It is hoped that the shock of the Brexit result in July sent a shockwave through the economy, but it might be able to bounce back in August, now that Theresa May has been installed at the new PM and businesses find ways to continue to grow even in a business environment which has an unstable future.
The Bank of England also reduced interest rates to a historically new low, as the Governor Mark Carney stepped in to try and steady the UK economy through potentially troubled waters.