UK economic activity slows as rising interest rates hit spending

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UK economic activity slowed sharply in July as rising interest rates hit consumer spending and a manufacturing downturn deepened, a closely watched survey has shown.

The flash UK PMI services output index, a measure of activity in the sector, fell to a six-month low of 51.3. Meanwhile, the manufacturing output index hit a seven-month low of 46.5, indicating that a majority of businesses were reporting a contraction. This brought the Composite index, which combines the two sectors, to a seven-month low of 50.7 — down from 52.8 in June.

Chris Williamson, chief business economist at S&P Global Market Intelligence, which publishes the index, said the data showed the UK economy had “come close to stalling”.

“Rising interest rates and the higher cost of living appear to be taking an increased toll on households,” he said. “Meanwhile, manufacturers are cutting production in response to a worryingly severe downturn in orders, both from domestic and export markets.”