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UK economy was struggling before Brexit vote: Survey

The U.K. economy was stuttering even before the Brexit vote, according to a wide-reaching survey from the British Chambers of Commerce (BCC) published on Tuesday.

The country's main business-lobbying group said the service sector – the main driver of the U.K. economy – was weakening before the referendum last month, with both domestic and overseas sales falling. Its survey was based on more than 8,200 responses from private sector firms during the second quarter of 2016.

"Even before the EU referendum, both business confidence and economic growth were softening in many parts of the U.K. Our latest survey results, captured just before the vote, suggest that many businesses have been operating in something of a holding pattern for some time," Adam Marshall, acting director general of the BCC, said in the report.

The services sector accounts for more than three-quarters of Britain's economic output, according to the U.K.'s Office for National Statistics.

The BCC said manufacturing activity in the U.K. was also at historically low levels.

Marshall said there remained a vacuum of knowledge as to how the vote to leave the European Union (EU) would affect British business performance.

"It is categorically too early to say what impact the referendum decision has had on most firms across the U.K., as we have as yet had only anecdotal evidence from those facing challenges, those holding steady, and those seizing new opportunities," Marshall said.

"The impact of the referendum will require many businesses to take decisions whose impacts will take time to show up on the bottom line," he added.

The BCC's previous director general, John Longworth, resigned ahead of the referendum this year after attracting controversy over his support for Brexit.

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Key findings from Tuesday's survey include a stalling in hiring intentions and a falling-off in manufacturers that are experiencing improved cash flows.

After publishing the weak data, the BCC is calling on British politicians to direct investment toward transport, energy, housing and digital schemes. It says such a move will have a major benefit to supply chains, jobs and productivity.

In early June and before the Brexit vote, IHS Global Insight's chief European economist, Howard Archer, penned a note to that which predicted a leave vote would see Britain's GDP growth this year drop from an expected 1.8 percent to 1.4 percent.

"There is a very real risk that the economy may not bounce back that well in the second half of 2016 — even if there is a vote to stay in the EU," he said at the time.

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