THE likelihood of the UK falling into recession has increased, a senior economist has warned, after key surveys signalled business activity contracted in August as Brexit weighs.

UK services sector growth ground to a near-halt in August, according to a survey published yesterday by the Chartered Institute of Procurement & Supply. Reports from CIPS earlier this week showed deep downturns in UK manufacturing and construction activity.

READ MORE: Ian McConnell: Very British bravado on Brexit from Johnson fuels fears for UK future

CIPS’s all-sector PMI (purchasing managers’ index), a weighted average of services, manufacturing and construction sector output indices, fell from 50.3 in July to 49.7 in August on a seasonally adjusted basis. This took it below the level of 50 deemed to separate expansion from contraction.

Chris Williamson, chief business economist at CIPS survey compiler IHS Markit, said: “The likelihood of the UK falling into recession has increased. Jobs growth stalled as business confidence regarding the year-ahead outlook deteriorated sharply amid escalating Brexit worries.”

READ MORE: Ian McConnell: Boris Johnson suspension of Parliament spells grave Brexit jeopardy for UK

CIPS’s services business activity index fell from 51.4 in July to 50.6 in August on a seasonally adjusted basis. Services companies’ confidence about prospects for increased business activity in 12 months’ time was at its weakest since July 2016.

READ  MORE: Ian McConnell: Boris Johnson ‘oomph’ is no kind of answer to grave Brexit fears of millions

Mr Williamson said: “Business activity in the service sector almost stalled in August as Brexit-related worries escalated, curbing spending by businesses and consumers. So far this year, the services economy has reported its worst performance since 2008.”

The UK economy contracted by 0.2 per cent in the second quarter.