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Services rebound but UK economy set to slow

Monday, September 05, 2016 - 01:45

Britain's services industry bounced back strongly last month from a slump triggered by June's vote to leave the EU, reducing the liklihood of recession. But, as Hayley Platt reports, overall economic growth still looks set to slow sharply.

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Healthy figures for the UK's service sector The latest PMI data for August shows the biggest monthly rise in 20 years - comfortably above the 50 mark which denotes growth. It follows last week's equally positive surveys of the manufacturing and construction sectors. But while survey compilers Markit say the likelihood of a recession triggered by the Brexit vote has reduced it hasn't gone away completely. (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN, SAYING: "I worry that the UK has strong data because markets have remained strong and people are feeling more confident. I see remarkably little evidence in terms of underlying economic activity to allow me to believe that the UK economy is yet out of the woods." Sterling rallied almost half a cent to hit a seven-week high against the dollar. But overall the economy still looks set to slow sharply. And that could mean another rate cut from the Bank of England before the end of the year. (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN, SAYING: "It's right that the Bank of England should be worried about the outlook for the economy, maybe wrong however to assume that the bank now has the facility to make any difference. Arguably we need to see fiscal initiatives brought to the table by Mr Hammond in his Autumn Statement and also a gradual unwinding of the red tape that strangles entrepreneurial vigour in the UK." It's all being closely watched by Britain's new Prime Minister. Theresa May's been trying to drum up business in between meetings at the G20 summit in China. She's had some success. Australia's PM Malcolm Turnbull says post-Brexit trade talks between the two countries have already begun. But President Obama wasn't so accommodating - warning there would be no fast-track deal.

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Services rebound but UK economy set to slow

Monday, September 05, 2016 - 01:45