Ross Clark Ross Clark

Are we heading for a recession? If so, don’t just blame Brexit

So will those Remainers seemingly hoping for a Brexit-related recession get what they want after all? This morning Purchasing Managers’ Index (PMI) for the service sector certainly points in that direction. The index, which is really just a questionnaire to businesses but which can give advance warning of swings in economic growth, fell to 50.4 in November, down from 52.2 in October and 54 in September. Anything above 50 denotes growth – so it doesn’t indicate we are yet in recession – but it suggests a steep plunge in activity and confidence which could well take us there.

It would be foolish to deny any link with the Brexit crisis. While firms quickly regained their composure after the 2016 referendum, when the PMI took an even deeper but brief plunge, the impasse in Parliament over May’s deal threatens to drag on for weeks and months, right up to next March when, by default, Britain is set to fall out of the EU without a deal.

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