UK 'on cusp of recession' after services sector shrinks

04 Oct 2019

The UK economy is 'on the cusp of recession' after the services sector suffered an unexpectedly sharp downturn last month, according to research from IHS Markit.

IHS Markit's Purchasing Managers' Index (PMI) for September fell to 48.8 from 49.7 in August. This represents its lowest level since July 2016.

A PMI reading below 50 indicates that the economy is generally contracting.

IHS Markit said the figures suggest that Britain's economy shrank by 0.1% in the three months to September.

Commenting on the survey, Chris Williamson, Economist at IHS Markit, said: 'Coming on the heels of a decline in the second quarter, (this) would mean the UK is facing a heightened risk of recession.'

If confirmed by official figures published next month, it would mean the UK has suffered two consecutive quarters of contraction – the definition of a recession.

The services sector – which covers a range of businesses, from law firms and accountants to travel agents and restaurants – represents 80% of UK economic output.


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