UK economy faces another recession on virus curbs: survey

UK economy faces another recession on virus curbs: survey

Sunday, January 24, 2021

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LONDON, United Kingdom (AFP) — Britain's private sector activity shrank in January due to another coronavirus lockdown and the Brexit fallout, survey data showed last Friday, placing the economy on course for a double-dip recession.

The composite purchasing managers' index (PMI) sank to an eight-month low at 40.6 points, compilers IHS Markit and the Chartered Institute of Procurement and Supply (CIPS) said in a statement.

The shift below 50 — indicating contraction — compared with 50.4 in December.

“A steep slump in business activity in January puts the locked down UK economy on course to contract sharply in the first quarter of 2021, meaning a double-dip recession is on the cards,” said Chris Williamson, chief business economist at IHS Markit.

“Services have once again been especially hard hit but manufacturing has seen growth almost stall, blamed on a cocktail of COVID-19 and Brexit, which has led to increasingly widespread supply delays, rising costs and falling exports.”

Those delays were sparked after Britain finally departed the European Union's single market and customs union at the start of this year.

The economy had already suffered a historic recession in the first half of last year owing to an initial virus lockdown.

Britain earlier this month imposed fresh curbs as the Government sought to halt the spread of a more transmissible variant of the virus.

Markit on Friday said the speed of the January downturn was slower however than that in the first phase of the pandemic because many businesses had adapted and prepared for new restrictions, while sentiment was improved by vaccine rollouts.

The composite PMI nosedived to 13.8 in April 2020.

Friday's survey data also revealed that the steepest job losses in January were in hotels, restaurants, travel and leisure sectors.


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