British economic growth ‘near stalling’: Survey

May 5, 2016 7:46 pm

economic growth is “near stalling”, partly due to uncertainty over the EU referendum, according to a closely-watched survey.

British economic growth slowed in April and is “near stalling”, partly due to consumer uncertainty over the EU referendum about UK membership, according to a new survey.
London-based Markit, a global financial information and services company, said its Purchasing Managers’ Index (PMI) surveys for last month pointed to growth of just 0.1 percent.
The latest PMI survey indicated the British services sector rose at its slowest pace in three years in April.
The services PMI reading fell to 52.3 from 53.7 in March. A reading above 50 indicates growth.
Chris Williamson, chief economist at Markit, said the surveys were a “triple-whammy of disappointing ”.
“Some of the slowdown may be attributable to the early timing of Easter, though April also saw an increase in the number of companies reporting that uncertainty about the EU referendum caused customers to hold back on purchases, exacerbating already-weak demand linked to global growth jitters and ongoing government spending cuts,” he said.
Earlier this week, similar surveys from Markit showed UK factory activity contracted in April for the first time in three years, while construction activity grew at its slowest pace for nearly three years.
Employment growth in the services sector was also the slowest since August 2013, reflecting a recent weakening in the labor market as a whole.
“The looming EU referendum has had a profound effect on the [service] sector, keeping prices relatively stagnant and delaying new orders,” said David Noble, head of the Chartered Institute of Procurement and Supply (CIPS), which produces the PMI surveys with Markit.
Howard Archer, a senior British economist at IHS Global Insight, said: “There is now compelling evidence that heightened uncertainty ahead of June’s referendum on EU membership is taking an increasing toll on economic activity.
The UK will hold a referendum on June 23 on whether the country should remain a member of the union.
Membership of the European Union has been a controversial issue in the UK since the country joined the then European Economic Community in 1973.
Those in favor of a British withdrawal from the EU argue that outside the bloc, London would be better positioned to conduct its own trade negotiations, better able to control immigration and free from what they believe to be excessive EU regulations and bureaucracy.
Those in favor of remaining in the bloc argue that leaving it would risk the UK’s prosperity, diminish its influence over world affairs, and result in trade barriers between the UK and the EU.
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