British economy to see a huge decline — Business survey

Hammond was planning to visit Beijing and Hong Kong “to promote British business opportunities, with a strong emphasis on the financial services sector”, the treasury said.

But while the International Monetary Fund has trimmed its world growth estimates, surveys of hundreds of business executives in Europe indicate the economic damage is so far largely contained to Britain.

He added that the downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to “Brexit”. It also suggests that UK GDP could shrink by 0.4 percent in the third quarter as manufacturing has dropped to its lowest level since February 2013.

A key survey of British business activity for July – the first full month since the referendum – saw the biggest drop since April 2009, and an overall contraction in private sector activity.

The flash, or preliminary, Markit survey of purchasing managers fell by the most in its 20-year history.

The new orders index for services firms fell by the largest amount on record, and there was the first decline, albeit slight, in services employment since December 2012. Manufacturers reported job cuts.

Economists said the “reset” Hammond had in mind may resemble the fiscal rule adopted by his Osborne in 2010 when he aimed to balance the public finances within five years, excluding investment spending and taking into account where Britain was within the economic cycle.

The report noted there wasn’t an uptick in costs, which some are fearing as the plunge in the pound since the vote should make fuel, raw materials and imports more expensive.

He and Theresa May have given signals that they are keen to avoid tax rises.

Michael Hewson, analyst at CMC Markets, said the survey findings were worse than expected.

LONDON – Britain could reset fiscal policy if necessary in the wake of the Brexit vote, finance minister Philip Hammond said on Friday in his strongest comments to date on how policy may change after Britain’s historic decision to leave the EU.

The services index fell from 52.3 in June to 47.4, which is the lowest since the peak of the financial crisis seven years ago, while manufacturing went down from 52.1 in June to 49.1.

Hammond will be urged by his G20 colleagues and the IMF’s managing director, Christine Lagarde, to ensure the “divorce” negotiations with the other 27 members of the European Union go as smoothly as possible.

But U.S. Treasury Secretary Jacob Lew, speaking to reporters in Athens before flying to China, downplayed the likelihood of aggressive joint action.