Britain's economy slowed in April and may stall as consumers worry about June's referendum on whether Britain should remain a member of the European Union. As David Pollard reports, the new survey of the dominant services industry isn't the first to show how Brexit fears are having a significant impact on the economy
There's been warning after warning of the damage a Brexit could do to Britain's financial services industry. But right now the headlines are about this: London's City Hall - the seat of its mayor and the top prize in UK local elections. A victory for favourite Sadiq Khan would end eight years under pro-business conservative leadership. If still, for business, Brexit is the bigger issue. (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "The London Mayoral race is very much a side show. I think that the issues overhanging the UK financial services industry are very much related to its status within the EU." With in the meantime, a UK economy apparently in stasis. Activity in its dominant service sector at its slowest in over three years - and below even the lowest forecasts. That as China still adds to global concerns - data shows its service sector expansion also slowing - and as Britain runs a current account deficit at seven percent of GDP. (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "The post-crisis rebound in trade has been extremely feeble, and the medium-term forecasts are that we won't see much support from net exports going forward ... The factor which will move will be the currency." And uncertainty - as the June 23rd vote gets ever closer. (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "If you look at support for the EU historically on a multi-year basis, it's tended to trend lower when the UK economy is doing less well. Rightly or wrongly, the UK population tends to blame Europe for its economic woes." More weakness could see UK Q2 growth slump to just 0.1 per cent from 0.4. That perhaps putting further monetary easing back on the Bank of England agenda - a thought unthinkable just a few months ago.