Brexit: UK economy may be shrinking on back of no-deal fears

Dominant service sector came close to standstill in June, according to IHS Markit/Cips

The UK economy has suffered its first quarterly contraction in seven years, a closely watched survey suggests, as the looming threat of a no-deal Brexit paralyses business activity.

Growth in the UK's dominant services sector came to a near standstill in June, confirming a gloomy outlook for a month in which the manufacturing and construction industries plunged into reverse.

In a 'no deal' scenario, the UK would leave the single market and the customs union immediately with no 'divorce' arrangement in place. The European court of justice would cease to have jurisdiction over the UK, and the country would also leave various other institutions including Euratom and Europol.

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