Service sector activity contracts, risk of recession “heightened”

Service sector activity contracts, risk of recession “heightened”

New data revealed on Thursday that UK service sector activity contracted in September, with companies the least optimistic about future growth of activity since after the Brexit referendum in 2016.

The UK is facing a “heightened risk of recession,” said the Chief Business Economist at IHS Markit.

The IHS Markit/CIPS UK Services PMI Business Activity Index dropped to 49.5 in September, down from 50.6 recorded in August.

According to the data, jobs at service sector companies were cut for the first time in five months, occurring at the fastest rate in nine years.

The survey also shows that international clients switched business to other markets following the prevailing worries surrounding a no-deal departure from the European Union.

“At current levels the surveys point to GDP falling by 0.1% in the third quarter which, coming on the heels of a decline in the second quarter, would mean the UK is facing a heightened risk of recession,” Chris Williamson, Chief Business Economist at IHS Markit, said.

“Brexit-related concerns dominated the September survey responses, linked by companies to falling sales, cancelled and postponed projects, a lack of investment and job losses,” Chris Williamson continued.

Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said “an exhausted sector’s optimism faded away to July 2016 levels and new export orders fell at their fastest rate since March.”

“Some respondents mentioned overseas customers were putting spending decisions on hold or choosing other European suppliers instead. In this last month before the Brexit deadline, there is little time or vision for a major turnaround in fortunes before the end of the year,” Duncan Brock added.

Indeed, with the Brexit deadline fast approaching, uncertainty prevails over the nation’s future.

Just last week the Supreme Court ruled that Boris Johnson’s prorogation of Parliament was not only unlawful but also ineffective and non-existent.

The Prime Minister is now setting out his proposals for a Brexit deal in Parliament, according to the BBC.