Britain’s economic growth has slowed this month as businesses postpone making major decisions until after the election, according to a closely watched business survey.
But even as activity fell to its lowest level in seven months, UK private sector output was ahead of its European rivals.
According to the S&P Global survey, the UK’s score fell from 53 in May to 51.7 last month. A reading above 50 represents growth.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Preliminary data from the June PMI survey indicates a slowdown in the pace of economic growth, indicating that GDP is now growing at a slow quarterly rate of just over 0.1 percent.
“The slowdown partly reflects uncertainty around the business environment in the run-up to the general election, with many businesses seeking a pause in decision-making pending clarity on various policies.” It comes after the British economy recovered earlier this year from a recession at the end of 2023.
Go slow: The latest PMI reading showed a slowdown in June, led by a drop in the services sector reading to 51.2 from 52.9
The economy grew at what was described as a “breakthrough” pace of 0.6 percent in the first quarter of 2024.
And the Bank of England this week upgraded its outlook for the second quarter from 0.2 percent to 0.5 percent. The outlook has been buoyed by a drop in inflation to 2 percent and the likelihood of an upcoming interest rate cut.
However, yesterday’s PMI reading showed a slowdown in June, led by a drop in the services sector reading to 51.2 from 52.9.
The smaller manufacturing sector’s figure rose to a two-year high of 51.4. Analysts said they expected a recovery next month.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “The fall in PMI is an election-related issue, the UK is growing well.”
Across the eurozone, the PMI reading fell to a three-month low of 50.8 in June, compared with 52.5 in May.
That reflected a sharp drop in German manufacturing activity and a slowdown in France, which recorded a decline in output for the second straight month to 48.2. Germany’s economic activity slowed to 50.6.
ING’s Bert Colijn said the eurozone PMI reading was a “reality check” showing the bloc’s economic recovery “is not a Cinderella story.”
“With euro risk returning around the French election and higher rates still seeping into the economy, now is no time to be complacent,” he said.
“The eurozone economy is performing better than in 2023, but obstacles remain.”
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