In August the UK service sector grew at its lowest rate in sixteen months, but a double dip recession remains unlikely, according to the Markit/CIPS purchasing manager’s index for August.
The report says the slow down in growth has undermined new contract wins and shows business confidence remaining at an historic low.
A GDP increase of just 0.5 per cent for Q3 means that the Q2 rate of 1.2 per cent growth represents a peak in the recovery.
Redundancies rose in August owing to falling backlogs of work on the month, which further reduced capacity pressure.
Chris Williamson, chief economist at Markit said: “Confidence about the year ahead has failed to recover from June’s record drop, with public sector spending cuts and the looming VAT hike in January creating uncertainty over the future direction of the economy. While a double-dip recession remains unlikely, the survey suggests that the risk has increased and that growth looks set to be slow and choppy going forward.”
