LONDON (Reuters) – Britain’s economy appears to have shrunk for the first time since late 2012 between April and June as worries about Brexit were compounded by global trade tensions, a closely watched survey showed on Wednesday.
A day after Bank of England Governor Mark Carney warned of the growing risks from a no-deal Brexit and protectionist trade policies, a gauge of Britain’s huge services industry — the IHS Markit/CIPS services Purchasing Managers’ Index (PMI) — slipped to 50.2 in June, just above the no-growth level of 50.
Economists - Reuters - PMI - May - Level
Economists polled by Reuters had expected the PMI to remain at May’s level of 51.0.
Equivalent surveys for manufacturing and construction published earlier this week showed those sectors contracted in June, meaning Britain’s economy overall probably shrank by 0.1 percent in the second quarter, IHS Markit/CIPS said.
Product - Shrank - Quarter - Months - Data
British gross domestic product last shrank from one quarter to another in the final three months of 2012, according to official data. The last time GDP shrank for two or more quarters in a row — the widely accepted definition of a recession — was in 2008-2009, during the global financial crisis.
“The latest downturn has followed a gradual deterioration in demand over the past year as Brexit-related uncertainty has increasingly exacerbated the impact of a broader global economic slowdown,” said Chris Williamson, chief business economist at IHS Markit.
Risks - Downside - Sentiment - Year - Quarter
“Risks also remain skewed to the downside as sentiment about the year ahead is worryingly subdued, suggesting the third quarter could see businesses continue to struggle.”
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