UK economy slows nearly to a halt as Brexit weakens demand

The UK economy grew so slowly last month that it came close to stalling, as the services sector could only muster modest growth, while British manufacturing and construction saw weak expansion as Brexit uncertainty continues to take its toll, according to a recent business survey.

The IHS Markit/CIPS services Purchasing Managers’ Index (PMI) climbed a touch higher in May to 51.0, up from 50.4 recorded in April, registering marginally above the 50.0 no-change mark for the second consecutive month.

UK economic growth remains ‘disappointingly muted’

Even though economic growth was able to reach a three-month high in May, the pace of expansion remained ‘disappointingly muted’, according to Chief Business economist at IHS Markit, Chris Williamson.

‘The UK economy remained close to stagnation midway through the second quarter as a result, registering one of the weakest performances since 2012,’ he added.

Companies surveyed reported weak business activity and subdued order books, leading to a reluctance to hire new staff and invest in growth in both domestic and overseas markets.

‘Many businesses remain cautious in relation to spending and investing in the uncertain political environment, which is exacerbating the impact of a wider global economic slowdown on the UK,’ Williamson said.

Bank of England forecasts weak quarterly growth

Data from the Office of National Statistics (ONS) showed that the British economy grew by a relatively robust 0.5% in the first quarter of this year. But the country is unlikely to recreate that level of expansion again.

The Bank of England (BoE) has forecast that the UK economy grow by just 0.2% in the three months to June, making it far more likely to see the BoE slash interest rates than raise them year.