U.K. Services Hit a Wall in April, Deepening Virus Malaise

(Bloomberg) -- U.K. services shrank at the fastest pace in more than two decades last month as the coronavirus kept the nation in lockdown.

IHS Markit's Purchasing Managers Index fell to the lowest since the survey began in 1996. Four-fifths of respondents said activity had dropped since March, and there were record-low readings for new work, backlogs and employment.

Bank of England officials meet this week to decide what to do next to counter what could be the sharpest collapse in centuries. The central bank has slashed interest rates to near zero and increased bond buying, while Prime Minister Boris Johnson's government is subsidizing wages and backing company loans.

“The downturn in the U.K. economy during the second quarter of 2020 will be far deeper and more widespread than anything seen in living memory,” said Tim Moore, a director at IHS Markit.

The figures suggest a drop in output of about 7% in the second quarter, but it may be even greater, Moore said.

The BOE announces its next policy decision on Thursday.

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