The study found that its flash United Kingdom services PMI (purchasing managers’ index) hit an 88-month low of 47.4 this month, compared to 52.3 in June.
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The 50-point level marks the line between contraction and growth and the index has been volatile since the beginning of the year.
According to a monthly survey, Britain’s business activity fell in July to its lowest level since April 2009, providing first evidence to the assumption of Brexit’s damaging effect on the country’s economy. The services business expectations index also experienced its largest decline on record.
An early reading of factory and services activity in July revealed the sharpest decline in output since the height of the global financial crisis, new data from IHS Markit showed on Friday.
In the first estimate of business activity since the Brexit vote, manufacturing and services firms reported a fall in orders and delayed projects.
Shockwaves from the vote did not pass Britain by, however, with a corresponding survey there registering the biggest drop in its 20-year history to suggest the economy is shrinking at its fastest rate since the financial crisis.
On the other hand, manufacturing exports rose to the greatest extent for nearly two years due to the plunge in the country’s currency following the Brexit vote.
‘However, with a subdued global economy, it is not yet clear whether these opportunities will materialise in the long term’.
A Reuters poll earlier this week predicted Britain’s economy would slide into recession in the coming year, forcing the BoE to cut interest rates next month and start purchasing bonds again.
The new figures also seem to scotch any idea that Europe would be hit as hard by Brexit as the UK, an idea used to suggest the UK would have a good negotiating position for trade deals as European countries would need a deal as much as the UK would.
The vote resulted in an immediate selloff of global and US stocks and a rise in the USA dollar against major currencies – a move that, if sustained, could hurt USA exporters.
“The readings suggest we are heading for a recession again and it is nearly certain the Bank of England will pull the trigger on aggressive stimulus to boost aggregate demand”.
“These PMIs are truly abysmal and exactly what [BOE Governor] Mark Carney needs to raid the monetary policy cupboard for everything that’s left”. The Bank will throw the kitchen sink at this now’.
Asked if that implied a “two year shadow from Brexit”, he said: “Yes, and it’s not the only shadow the world economy faces”.
Speaking in China on Friday, Philip Hammond, the new UK Chancellor of the Exchequer, said the report showed the Brexit vote had damaged confidence and caused a period of economic uncertainty.
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Michael Gove, a former Conservative Cabinet minister, and one of the most prominent Leave campaigners, famously said during the referendum campaign that the British people “had had enough of experts”.
