Tue, 21st May 2019
Brexit anxiety has brought the UK economy to a near standstill, as the latest snapshot of the services sector, published by IHS Markit, shows that the level of optimism among UK businesses has fallen to its lowest since the financial crisis.
The survey covered hotels, banks, restaurants and similar industries, and shows that growth has been subdued in recent months, with companies putting their spending decisions on hold because of uncertainty surrounding the arrangements for the UK to depart from the EU.
GDP growth is stalling, and the PMI shows lower demand as consumers are spending less even during winter sales. The Markit/Cips service sector PMI read at 51.2 for December, up slightly from November, but still one of the slowest rates of increase since the Brexit vote.
UK house prices are also showing slowing growth, with annual values up by just 0.5 percent, the slowest gain since February 2013. Borrowing figures reveal faltering demand for consumer credit and mortgages. Consumers had been borrowing more at the start of the year, but home purchases and retail spending are now slowing down.
The services sector is usually a major driver of economic growth, but that sector is clearly losing steam as Brexit anxiety mounts. In contrast, the manufacturing sector is showing strong growth as companies are stockpiling in a bid to protect themselves from any border delays that may occur if there is a no-deal Brexit. The Brexit deadline is less than 90 days away, and the level of uncertainty about how the deal will play out is weighing heavily on many companies.