G20 countries pledge to boost growth, dampen Brexit shock

The Chancellor of the Exchequer is now at the summit in Chengdu, central China to meet policymakers with the aim of enticing future investment in the wake of the European Union referendum.

Britain economy has actually declined after Britons voted for leaving the European Union last month, economic data issued by the Markit showed on Friday.

“Given the record slump in service sector business expectation, the suggestion is that there is further pain to come in the short-term at least”, said Markit chief economist Chris Williamson said in a statement.

“This is exactly what most economists were saying would happen”.

However, Neil Wilson, markets analyst at ETX Capital, said the flash PMI data showed that Britain should be bracing itself for another recession, while the Bank of England should move to cut interest rates in August.

Private sector business activity, as measured by research group Markit’s Purchasing Managers Index (PMI), sank in July to 47.7 points.

The firm said pre-tax profits rose from £135.1 million to £206 million in the first half of the year, with gross premiums growing to £1.29 billion.

Britain’s new Treasury chief, Philip Hammond, said he would be prepared to use the next budget update, called the Autumn Statement, to help the economy in the event of a downturn.

“The reality is that there will be a measure of uncertainty right up to the conclusion of our negotiations with the European Union”, Hammond added.

The market report contrasts with a Bank of England report which found that there is no clear evidence of a slowing in United Kingdom economic activity following the vote to leave the EU.

Although business confidence dropped to an 18-month low, the overall pace of economic growth was in line with pre-Brexit trends, and employment across the eurozone rose.

Mr Hammond told reporters on Sunday (local time) the two-year negotiating period, once launched, represented “quite a tight timescale” and Britain needed to go into it with clear objectives. Beijing is one of the UK’s biggest inward investors.

“There is going to be uncertainty about the outcome hanging over the world economic outlook for perhaps the next couple of years”, Hammond said.

The latest Markit/CIPS PMI survey looks to spell bad news for the United Kingdom economy, signalling the sharpest drop in activity since early 2009.

“It tells us that people’s confidence, business’ confidence has been dented”.

Mr Hammond also refused to rule out the prospect of joining the Trans-Pacific Partnership (TPP) – which non-Pacific countries could theoretically join in some capacity subject to member countries’ approval – or a bilateral trade with the Chinese which is rumoured to have been discussed at the meeting.