IHS Markit/CIPS survey shows that the UK economy is set for deepest downturn “in living memory” as businesses are crippled by the lockdown which has resulted from the global Coronavirus pandemic.
The survey showed that around 79% of services have been negatively impacted as a result of the response to the virus. The services sector in the UK contracted at blistering pace in March and April and the survey suggests that the UK’s first quarter GDP may fall by a staggering 7% or more.
Tim Moore, Director of Economics at IHS Markit, said the results of the survey “highlights that the downturn in the UK economy during the second quarter of 2020 will be far deeper and more widespread than anything seen in living memory”.
“The April survey reading is consistent with the economy falling at a quarterly rate of approximately 7%, but we expect the actual decline in GDP could be even greater, in part because the PMI excludes the vast majority of the self-employed and the retail sector.”
The Purchasing Managers’ Index (PMI) services index showed a record-low reading of 13.4 in April which is down from 34.5 in March. Anything below 50 indicates a contraction.
🇬🇧 Huge slump in UK services activity in April, latest PMI data shows, with the Business Activity Index collapsing to 13.4. Input costs ease for the first time since 1996. Read more at https://t.co/ePOZZcXC3Q pic.twitter.com/yeh16qdGPM
— IHS Markit PMI™ (@IHSMarkitPMI) May 5, 2020
According to IH Markit, the figure was “by far the lowest recorded since the series began in 1998”.
Prior to March and April, the record low was back in November 2008 during the global recession where it stood at 40.1.
According to economists, the situation is not set to improve greatly over the coming months with the level of uncertainty and the lack of consumer confidence which has plummeted.