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Brexit uncertainty contributed to a sharp slowdown in Britain's dominant services sector in October, according to a survey of executives.
The IHS Markit Services Purchasing Managers' index revealed the slowest pace of growth since the snowstorms at the start of the year. The headline reading fell to 52.2 in October, down from 53.9 in September and far below City economists' expectations of 53.8.
Monday's survey is the most important economic data yet published in the United Kingdom.
Companies responding to the survey said that uncertainty over the outcome of negotiations, and slowdown in global growth, had reduced demand for business services such as finance, law and advertising, which are among the UK's largest exports.
"The disappointing service sector numbers are mounting evidence that Brexit worries are growing in the economy," said Chris Williamson, chief business economist at IHS Markit.
Excluding the drop in activity during the snowstorms, October's services PMI was the lowest reading since July 2016, in the immediate aftermath of the Brexit vote. Services account for about 80 percent of the UK economy.
Combined with a weak manufacturing PMI, published last week, and a construction survey that pointed to only modest growth, the growth of the economy was only 0.2 per cent in the economy as a whole, said Andrew Wishart, UK economist at Capital Economics.
The data suggest the UK economy has lost momentum following the success of the World Cup and the Royal Wedding. National income rose 0.7 per cent in the three months to the end of August.
Companies also report an increase in costs, and are more likely to be more expensive because of the weaker pound.
However, sharp falls in the PMI surveys, which measure rather than output, can reflect a drop in business confidence rather than actual activity. The drop in PMI after the Brexit vote was not reflected in the official growth figures.
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Howard Archer, chief economic adviser to the EY ITEM club, has forecaster, pointed out that "with the exception of July 2016, the degree of optimism was the lowest for six years, down to levels of the eurozone debt crisis ".
The weakness in the UK has been slowed down by a slowdown in the euro area. The October eurozone PMI services fell to its lowest level since 2016.
Likewise, a survey of economic sentiment, also published on Monday morning, found that optimism among businesses in the currency bloc had fallen to its lowest level since
Apart from Brexit Negotiations, businesses told IHS Markit that they were effected by a global slowdown, trade wars and financial tighter conditions.
"It is still unclear as to which extent they are exacerbating or obfuscating a more broad-based slowing of the economy, which would have important implications for policymaking," Mr Williamson said.
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