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UK business activity languishes on inflation surge

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Britain's private sector business activity is languishing at its lowest level for more than a year on high inflation, increasing the likelihood of recession, survey data showed Thursday.

The composite purchasing managers' index (PMI) remained at a 15-month low of 53.1 points in June, compilers S&P Global and the Chartered Institute of Procurement and Supply said in a statement.


The reading, unchanged from May, held above the key 50-point barrier that indicates growth.

However, the UK economy "is starting to look like it is running on empty", said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"Current business growth is being supported by orders placed in prior months as companies report a near-stalling of demand."

Rocketing UK inflation, which spiked in May to a 40-year peak of 9.1 per cent, is weighing on household spending and business optimism, the survey showed.

Soaring consumer prices are also sparking upwards pressure on wages.

"Survey data suggest the rate of inflation will... remain historically high for some time to come," added Williamson.

This indicates that "the UK looks set for a troubling combination of recession and elevated inflation as we move into the second half of the year", he warned.

The Bank of England last week forecast the UK economy to contract by 0.3 percent in the second quarter that ends on June 30 - and after growing in the first three months of the year.

A recession is defined as two quarters of negative growth in a row.

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