Uncertainty over vote on EU membership weighs on UK economy

LONDON – A key indicator shows that the U.K. economy slowed in April and is close to stagnating amid fears of the looming referendum on whether Britain should remain in the European Union.

The Markit/CIPS purchasing managers’ index for the services sector — a gauge of business activity — dropped more than expected to 52.3 points from 53.7 in March, the lowest since February 2013. The survey is important because nearly 80 per cent of Britain’s economy is based on services.

The pessimism about the future was reflected in two other surveys this week, with contractions in manufacturing and a slowdown in construction.

Howard Archer, chief European economist at IHS Global Insight, notes the Bank of England pays significant attention to the surveys, “and April’s markedly weaker set will undoubtedly be of concern.”