IHS Markit warns of recession on scale 'not seen in modern history' as business activity slumps
Flash UK Composite Output Index falls to record low of 37.1
The coronavirus outbreak has dealt a "severe blow" to the UK economy, according to the latest IHS Markit/CIPS Flash UK Composite PMI, which showed there had been a record slump in business activity as emergency measures to halt the spread of the virus kicked in.
The data, compiled between 12 to 20 March, revealed the flash UK Composite Output Index fell to a survey record low of 37.1 from 53 in February, while the flash UK Services Business Activity Index registered 35.7, down from the final figure of 53.2 in February.
The reading for the UK Composite Output Index signalled the fastest downturn in private sector business activity since the series began in January 1998, according to IHS Markit, with the previous low of 38.1 last seen in November 2008.
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IHS Markit said that outbreak had already "dealt the UK economy a more severe blow than at any time since comparable figures were first available over 20 years ago", with a combined monthly decline in output across manufacturing and services exceeding that seen even at the height of the Global Financial Crisis.
It also noted that the latest PMI figures were compiled before the UK Government decision to order pubs, restaurants and other leisure businesses to close by midnight on 20 March.
Manufacturing production also fell sharply during the period in March, declining to 44.3 from February's 52.2 and the steepest rate of decline since July 2012.
Chris Williamson, chief business economist at IHS Markit, said: "With additional measures to contain the spread of the virus set to further paralyse large parts of the economy in coming months, such as business closures and potential lockdowns, a recession of a scale we have not seen in modern history is looking increasingly likely.
"Historical comparisons indicate that the March survey reading is consistent with GDP falling at a quarterly rate of 1.5-2%, a decline which is sufficiently large to push the economy into a contraction in the first quarter."
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Williamson added that this decline would be "the tip of the iceberg and dwarfed by what we will see in the second quarter as further virus containment measures take their toll and the downturn escalates".
A similar collapse in business activity has been registered by IHS Markit Flash PMIs across the eurozone.
The ‘flash' IHS Markit Eurozone Composite PMI fell from 51.6 in February to 31.4 in March to register the largest monthly fall in business activity since comparable data were first collected in July 1998.
It said the prior low was seen in February 2009, when the index hit 36.2.
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