BRITSH services from banks to airlines unexpectedly contracted for the first time in five years and consumer confidence fell to the lowest level since at least 2004, as the economy edged closer to a recession.
An index based on replies from about 700 service companies fell to 49.8 in May, the Chartered Institute of Purchasing and Supply said yesterday in London. A reading below 50 shows contraction.
Nationwide Building Society's consumer sentiment index also dropped 1 point to 69, the lowest since the survey began in May 2004, said Bloomberg News.
The pound declined against the euro after the reports. While the Bank of England decides on interest rates today and Governor Mervyn King says the United Kingdom may face a recession, inflation is making it hard to cut borrowing costs.
The report "implies that the economy is the weakest since the last recession," said Neville Hill, an economist at Credit Suisse Group.