Britain’s Brexit crisis takes further toll as services shrink

Bloomberg

Britain’s Brexit turmoil inflicted further damage on the economy last month as the nation’s huge services sector shrank for the first time in more than 2 1/2 years.
With parliament gridlocked and Britain’s short-term future increasingly uncertain, companies and households held back spending in March, IHS Markit said. Its Purchasing Managers’ Index indicates that the economy shrank last month and stalled over the first quarter, with a risk that the slump deepens in the coming months.
“The continuing uncertainty was eventually going to take its toll,” said George Buckley, chief UK economist at Nomura in London.
“Where it typically effects growth, on the expenditure side at least, is through consumer spending and particularly investment. You get the impression businesses simply are just sitting on their hands.”
The latest twist in the Brexit saga came when Prime Minister Theresa May asked opposition leader Jeremy Corbyn to help work out a joint plan in an attempt to break the deadlock and prevent the UK crashing out of the European Union without a deal.
Still, time is running short, with the UK likely to need an extra delay beyond next week’s potential cliff-edge deadline of April 12.
The Institute of Directors said that brinkmanship has gone on too long” and politicians must end “this miserable uncertainty.”
As politicians bicker, the economy is faltering. Markit’s services PMI dropped to 48.9 in March from 51.3 in February, below the key 50 level for the first time since immediately after the Brexit referendum in 2016.