UK economic growth has slowed

PMI surveys signal weakest economic growth for 2.5 years

As reported today by The Guardian – Britain’s economy is losing momentum, knocked by weaker household spending and worries about the global outlook, according to the latest in a string of downbeat business surveys.

Business activity grew at the slowest pace for more than two years in Britain’s dominant services sector last month, according to the Markit CIPS PMI report.

The authors said it looked as if GDP growth had slowed in recent months and was entering the final quarter of the year at a pace of just 0.3% – less than half the 0.7% seen in the second quarter, according to the most recent official data.

The report’s headline activity index was far weaker than City economists had been expecting. It was 53.3 in September, down from 55.6 in August, the weakest reading since April 2013 and much lower than a consensus forecast for 56.0 in a Reuters poll of economists.

The pound weakened against the euro and the dollar after the report, which economists saw as providing further reason for the Bank of England to hold off raising interest rates from 0.5%. Borrowing costs have been at a record low for more than six years.

The poll of companies in the service sector, which spans finance to restaurants, showed new business was also coming in at the slowest pace since April 2013.

The news comes against the backdrop of growing concerns about the global economy losing momentum, hurt by a downturn in China and volatility on financial markets.

In a separate survey by consultancy Deloitte, the chief financial officers (CFOs) of some of Britain’s biggest companies reported a sharp rise in uncertainty facing their businesses and said that they had scaled back their expectations for investment and hiring over the coming year.

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