Brexit Wreaks Havoc on U.K. Economy as Recession Risk Increases

The U.K.’s decision to leave the European Union inflicted an immediate blow on the economy as business activity shrank at its fastest pace since the last recession seven years ago.

In the weeks following Brexit, there was a “dramatic deterioration,” Markit Economics said in a one-time report published Friday. Services and manufacturing shrank and a gauge of the private-sector economy plunged to 47.7, well below the 50 level that divides expansion from contraction.

The slump is the strongest evidence yet that politics is propelling the world’s fifth largest economy into recession. It intensifies pressure on the Bank of England to deliver fresh monetary stimulus and on the government to reverse fiscal austerity. The pound dropped after the report was published, with Markit saying its latest readings put the economy on course to contract by 0.4 percent this quarter. Read More…