UK economy losing steam as concerns mount over Brexit

The UK economy is losing steam as concerns mount over Brexit, the latest round of industrial surveys has found.

The Purchasing Managers’ Index for services – which account for 80 percent of the UK economy – in August was 53.2, down from 53.8 in July.

Although any number above 50 points to an expanding economy, the latest figure was below the 53.3 predicted by City of London analysts and the lowest since September last year.

Composite PMI for August – which includes figures for construction and manufacturing – dipped from 53.9 in July to 53.8.

The surveys were compiled by IHS Markit.

The firm’s chief economist, Chris Williamson, said: “Although the latest two months’ data put the economy on course for another 0.3 per cent expansion in the third quarter, momentum is being gradually lost.

“The overall level of optimism also remained subdued, mainly linked to Brexit uncertainty, close to levels that have previously been indicative of the economy stalling or even contracting.”

Although August’s manufacturing PMI increased to 56.9, Lee Hopley, chief economist of EEF, the manufacturers’ body, said factories enjoying bumper exports due to the weak post-referendum pound were “making hay while the sun shines”.

She said: “There is little doubt that Brexit is likely to weigh on sentiment over the next 12 months with uncertainty over the UK’s terms of exit.

“As such, it is vital the government sends a signal to industry and investors in the UK and overseas that it is doing everything in its power to get growth of the UK economy back on the agenda.

“This must include a bold and ambitious cross-government industrial strategy.”