With UK and EU negotiators yet to strike a deal in Brussels, British businesses are becoming increasingly concerned about the prospect of a no-deal scenario, urging the government to do everything in its power to prevent such an eventuality.
Confidence in the UK services sector has fallen further, reaching a five-month low, driven by Brexit uncertainty, according to a fresh business survey.
The Purchasing Managers Index (PMI) ranked confidence in Britain’s services sector at 54.3 for August, beating most expectations despite the poor economic outlook.
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A figure above 50 indicates predicated growth in the sector and this latest figure estimates growth of 0.4 percent in the third quarter (Q3) of 2018.
The survey found investor confidence in construction and manufacturing to be especially low.
Duncan Brock of the Chartered Institute of Procurement & Supply, a sponsor of the PMI’s research, said “political indecision” related to Brexit is restricting investment and business activity in the UK.
“Though the sector remained in positive territory, the dark clouds of political indecision are still having an effect and preventing more business activity. Service providers are likely to continue along this vein for the rest of the year until those clouds have cleared,” Mr. Brock said in a statement on Wednesday.
Trade leaders have repeatedly called on the government to provide more guidance and clarity on what a no-deal Brexit scenario would entail, warning that it’s inhibiting growth and hurting businesses’ ability to plan ahead.
In the event of a hard Brexit, WTO tariffs would come into effect, making UK exports less price competitive in EU member states while also perhaps disrupting existing EU-UK supply chains, potentially leading to shortages.
The government has downplayed the adverse economic effects of a hard Brexit, insisting it won’t be “doomsday,” but business leaders remain worried, with some calling on the government to prevent a no-deal scenario at any cost.
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