The UK economy is back on track. The service sector is largely responsible for this robust economic comeback.
Following a sharp decline in July, because of the Brexit vote shock, the services sector made a comeback in August, with its biggest monthly increase in 20 years.
The Purchasing Managers’ Index (PMI, in short) of the service sector climbed at 52.9 in August, from July’s 47.4.
Chris Williamson, from HIS Market, believes that recession is avoided thanks to this big rise in PMI services. Moreover, the construction and manufacturing sector are behind the economic comeback.
Williamson points out that there are clues which point to the fact that Brexit effects are fading.
The pound climbed to a one-month high. The performance in manufacturing and construction industries have helped the currency revive.
The data suggests that fears of the economy contracting after the vote to Brexit were “a little overdone”, according to Peter Dixon – a London economist from Commerzbank.
Prime Minister Theresa May expressed her opinion today that the times ahead will not be “plain sailing”, however, she is optimistic about the opportunities which may come.
The Bank of England cut the rate of interest to 0.25 percent, part of a stimulus pack to help the UK prospects for investment.
Treasury chief Phillip Hammond will reveal his plan for fresh taxes and expenses before the end of this year. A majority of economists believe he will come up with further measures to induce growth.
Previously, there had been uncertainty over the changing of the government and the stimulus from the central bank.
Some analysts still think the British economy may struggle as the government tries to get the best possible Brexit deal.
Prime minister Theresa May aims to halt immigration from the EU, but at the same time to keep strong economic ties. Other European nations warn that the single market cannot limit the free movement of citizens.
The G20 summit showed just how complicated that wish is. While Mrs. May has spoken about the UK becoming a leading trade nation, Japan’s Shinzo Abe has voiced concerns that the UK is closing itself from the outside world. Barack Obama also warned that achieving a free trade deal with the UK is not a priority.
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