LONDON (Reuters) – Britain’s economic system seems to have saved up most of its regular development within the July-September interval, however uncertainty amongst firms remained excessive six months forward of Brexit, a business survey confirmed on Wednesday.
FILE PHOTO: Customers are seen eating at Mr Fish in north London May 22, 2012. REUTERS/Eddie Keogh
The IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) slipped to 53.9 in September from 54.three in August, a shade weaker than the median forecast of 54.zero in a Reuters ballot of economists.
IHS Markit stated Britain’s economic system was heading in the right direction to develop at a quarterly price of slightly below zero.four p.c within the three months to September — the identical as its common development price for the reason that Brexit referendum of June 2016.
The world’s fifth-largest economic system suffered a sluggish begin to the yr, when the nation was hit by unusually chilly climate, however grew solidly within the second quarter, albeit fuelled principally by client spending quite than commerce or manufacturing.
Samuel Tombs, an economist on the consultancy Pantheon Macroeconomics, stated Wednesday’s figures put scant strain on the Bank of England to boost rates of interest once more earlier than the March 2019 Brexit deadline.
“The economy remains a long way from overheating and growth is likely slow further if Brexit talks aren’t amicably concluded soon, given that firms are reporting … that political uncertainty is weighing on budget setting and confidence,” he stated.
IHS Markit stated business optimism ticked up in September, however Brexit worries had saved it “firmly anchored” at ranges that will usually point out an imminent slowdown.
Financial markets confirmed no response to the PMI, which was broadly as anticipated.
London and Brussels have but to agree the phrases of their March 29 divorce, which means there’s nonetheless an opportunity of a no-deal Brexit that almost all economists suppose would hurt British companies.
Other knowledge have additionally pointed to regular financial development for now, though final week official statisticians stated British firms reduce their funding within the second quarter of 2018.
Wednesday’s PMI additionally pointed to rising value pressures confronted by British firms linked to rising oil costs — one thing BoE officers might be watching to see if this feeds via into broader inflation strain.
Editing by Toby Chopra, Larry King