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UK economic momentum fading business surveys suggest

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By Euronews
UK economic momentum fading business surveys suggest

<p>Britain’s unexpectedly strong economic growth since last June’s vote to leave the European Union may be starting to fade as inflation picks up.</p> <p>A major survey of businesses by the financial data provider Markit has found slowing consumer spending is starting to hurt services companies. </p> <p>So what’s the message from the Purchasing Managers’ Index – or <span class="caps">PMI</span> – that it compiles?</p> <p>IG market analyst, Chris Beauchamp gave his opinion: “The <span class="caps">PMI</span> number dropped to a five-month low but I think we should take that in the context of the spike we’ve had since the Brexit vote and the drop in sterling really pushing economic activity higher. The big worry is that a lot of the good news is in the price, if you like, where the UK economy is concerned.”</p> <p><strong>Household budgets under strain</strong></p> <p>“Weaker consumer spending was a key cause of slower service sector growth, suggesting that household budgets are starting to crack under the strain of higher prices and weak wage growth,” Chris Williamson, chief business economist at <span class="caps">IHS</span> Markit, said.</p> <blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">UK <span class="caps">PMI</span>s indicate slowdown in UK <span class="caps">GDP</span> growth to 0.4% in Q1. My analysis of our surveys available here <a href="https://t.co/KQC9Y844u2">https://t.co/KQC9Y844u2</a> <a href="https://t.co/jht9fMY4em">pic.twitter.com/jht9fMY4em</a></p>— Chris Williamson (@WilliamsonChris) <a href="https://twitter.com/WilliamsonChris/status/837616776045342720">March 3, 2017</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script> <p>The prospect that growth may be slowing caused the pound to slump against the dollar and the euro and dashed talk of an interest rate rise in the UK.</p> <p>Markit’s Williamson said the <span class="caps">PMI</span>’s fall left it around levels more consistent with a further rate cut by the Bank of England than an increase.</p> <p>Optimism for the year ahead among British services firms does though remain reasonably strong. It dipped only slightly from January’s eight-month high.</p> <p>In contrast to the UK, eurozone business activity grew at its fastest pace in nearly six years in February according to surveys of the region’s purchasing managers. However retail sales in the 19 countries sharing the euro slipped at the start of the year, falling by 0.1 percent in January from December. </p> <blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">The eurozone’s economy is finally “firing on all cylinders” <a href="https://t.co/D5Vx5kZYUE">https://t.co/D5Vx5kZYUE</a> <a href="https://t.co/EOGPpwSANt">pic.twitter.com/EOGPpwSANt</a></p>— Financial Times (@FinancialTimes) <a href="https://twitter.com/FinancialTimes/status/837594372145299457">March 3, 2017</a></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>