The economy is in its worst spell since 2009 after contracting in August according to IHS Markit, which produces closely-watched data.
The purchasing managers’ index fell from 50 in July to 49.7 in August. Anything less than 50 indicates a contraction.
Chris Williamson from IHS Markit said, “Business activity in the service sector almost stalled in August as Brexit-related worries escalated, curbing spending by both businesses and consumers.
“So far this year the services economy has reported its worst performance since 2008, with worrying weakness seen across sectors such as transport, financial services, hotels and restaurants, and business-to-business services.
“After surveys indicated that both manufacturing and construction remained in deep downturns in August, the lack of any meaningful growth in the service sector raises the likelihood that the UK economy is slipping into recession.
“The PMI surveys are so far indicating a 0.1% contraction of GDP in the third quarter.
“While the current downturn remains only mild overall, the summer’s malaise could intensify as we move into autumn. Companies have grown increasingly gloomy about the outlook due to the political situation and uncertainty surrounding Brexit, adding to downside risks in coming months.
“With the exception of the slump in sentiment after the 2016 referendum, August saw service sector firms at their gloomiest since the height of the global financial crisis in early 2009.
“Overall jobs growth has meanwhile also ground to a halt as worries about deteriorating order books and the gloomier outlook took their toll on firms’ appetite to hire, pointing to a weakening labour market and adding to the darkening outlook.”