Fear of Brexit stalls economy
The prospect of a Brexit is “stalling” economic growth in April, a Markit/CIPS survey suggests.
GDP growth fell from Q1’s rate of 0.4% to just 0.1% last month as the UK service sector grew at its slowest pace in three years.
Scott Bowman, UK economist at Capital Economics, said the data “suggests that Brexit concerns are starting to weigh on activity more heavily”.
Other factors were the Easter break and the implementation of the national living wage.
Manufacturing activity also contracted in April for the first time in three years, while construction activity grew at its slowest pace for nearly three years according to Markit surveys earlier this week.
Bowman said: “In the near term, uncertainty ahead of the EU referendum – a factor cited by survey participants as keeping a lid on some activity this month – should keep economic growth fairly subdued.
“But growth should still be supported by solid real earnings growth and historically-high confidence.
“And a vote to stay in the EU would probably result in a bounce back in activity in the third and fourth quarters.
“Even if the UK did vote to leave the EU, we think the economy’s medium-term prospects would remain bright, with plenty of scope for a strong productivity-led acceleration in growth in coming years.”
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