Britain's dominant services industry is being hit by uncertainty over the EU referendum in June and the state of the global economy according to the latest surveys of businesses.
Britain’s dominant services industry is being hit by uncertainty over the EU referendum in June and the state of the global economy.
The latest surveys of businesses showed that in April they expanded at the lowest rate in more than three years as consumers – who are the main drivers of Britain’s recovery – remained jittery.
The financial data company Markit, which carried out the surveys, said if last month’s weakness persists, the UK’s economic growth may be just 0.1 percent in the second quarter, down from the 0.4 percent in the first three months of this year.
— Markit Economics (@MarkitEconomics) 5 May 2016
Markit chief economist Chris Williamson said the deterioration in April pushed the surveys into territory which “has in the past seen the Bank of England (BoE) start to worry about the need to revive growth” by easing monetary policy.
Britain’s economy has outpaced much of the rest of the rich world over the past three years. But it has been showing signs of slowing since late last year.
Economists generally believe a vote for Britain to leave the European Union on June 23 would deal at least a short-term blow to the economy, possibly prompting the BoE to cut already record-low interest rates or expand its bond-buying programme.
But it would also probably weaken the pound, adding to inflation and making it more difficult for the BoE to act.