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UK companies face worst spell since the crash as Brexit spooks firms and consumers

Tom Belger
·Finance and policy reporter
England, London, Southwark, London Bridge City, More London Riverside Office Complex and The Shard (Photo by: Dukas/Universal Images Group via Getty Images)
London skyline as key industry surveys show decline. Photo: Dukas/Universal Images Group via Getty Images

Key UK industries have faced their worst run of falling output since the 2009 financial crisis amid political turmoil over Brexit, according to a widely watched business survey.

Levels of new business dropped at one of the fastest rates in a decade across the UK’s dominant services sector, manufacturing and construction in October, new figures published on Tuesday show.

The services sector, which includes everything from retail to finance to creative industries, has stagnated over the past month, according to the latest purchasing managers’ index (PMI) from IHS Markit and the Chartered Institute of Procurement & Supply (CIPS).

Duncan Brock, the CIPS’s group director, said Brexit was hitting hard, sparking “hopelessness” and low levels of optimism as another deadline in January spells “more indecision and delay.”

READ MORE: Primark owner warns pound’s decline over Brexit will hit margins

He said: “Businesses are putting off their investments for happier times and consumers are saving their pennies in case rising costs have a more severe impact on their daily lives.

“Companies are waiting for a resolution by the UK government to salvage the current situation so workflows can begin again at healthier levels."

Managers reported that business levels were unchanged on the previous month, with a measure of 50 on the headline index. Figures above 50 show growth in trade, while figures below 50 show decline.

But a composite of the PMI data for services, construction and manufacturing, weighted for their size, showed together they have contracted.

READ MORE: UK workers face ‘longest pay squeeze in centuries’

The overall index for the three sectors remained below 50 for the third month in a row, the longest negative run for more than 10 years since the financial crash. It came in at 49.5, but marked an improvement on the previous month’s 48.8.

Chris Williamson, chief business economist at IHS Markit, which compiles the survey: "The UK PMI surveys collectively indicated a further overall decline in private sector output in October.

“Contractions have now been recorded in four of the past five months, marking the worst spell since 2009 during the global financial crisis.”

Separate figures from The Share Centre suggest Britain’s listed companies have suffered their worst quarter in almost three years, with more than half reporting lower profits for the second quarter in a row.