Brexit vote 'sparks biggest slump in economic activity since aftermath of 2008 global crash'

Storm clouds: Economists have issued warnings after the Brexit vote
AndrewCowie/AFP/Getty

Britain's vote to leave the EU has sparked the biggest plunge in economic activity since the aftermath of the global financial crisis, market data shows.

Figures from the Purchasing Manager’s Index (PMI) show the economy has suffered a dramatic deterioration this month, dropping at the fastest rate since the fallout from the 2008 recession.

The PMI surveys more than 650 companies from sectors including transport, business services, computing and restaurants.

Output and new orders in both the manufacturing and service sectors has dropped for the first time since 2012.

A number of firms have linked this to ongoing uncertainty during and after the referendum.

IHS Markit chief economist Chris Williamson said the drop has been attributed “in one way or another” to Brexit and warned there could be worse to come.

He said: "The only other times we have seen this index fall to these low levels, was the global financial crisis in 2008/9, the bursting of the dot com bubble, and the 1998 Asian financial crisis," he told the BBC.

"The difference this time is that it is entirely home-grown, which suggest the impact could be greater on the UK economy than before."

"This is exactly what most economists were saying would happen."

The IHS Markit PMI is the first set of data showing business reaction to the prospect of Britain leaving the European Union.

Samuel Tombs, who is chief UK economist at research consultancy Pantheon Macroeconomics, said the figures represent the "first major evidence that the UK is entering a sharp downturn".

But he did suggest that the "confidence shock from the Leave vote might wear off over the coming months".

Responding to the figures, new Chancellor Philip Hammond said: "Let's be clear, the PMI data is a measure of sentiment, it's not a measure of any hard activity in the economy.

"What it tells us is businesses confidence has been dented, they're not sure, they're in a period of uncertainty now."

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