THE UK is close to tumbling into a recession after the service sector took a huge hit from the Brexit vote.

The industry was rocked in July as EU uncertainty delivered a tailspin not seen for seven years, which damaged confidence, curtailed new business and affected jobs.

The findings, revealed in a Markit and Chartered Institute of Procurement and Supply (Markit/CIPS) report, follow similar dismal results in Britain’s manufacturing and construction sectors.

They also came as the National Institute of Economic and Social Research claimed the UK economy was heading for a marked slowdown with an evens chance of a recession in the next 18 months.

According to the Markit/CIPS document, the service sector, which accounts for around 80 per cent of the UK economy and includes banks and high street restaurants, suffered its largest ever monthly fall in activity last month.

The survey said the industry gave a reading of 47.4 in July, compared to 52.3 in June, which denoted the strongest rate of decline since March 2009.

Any number above 50 signals growth from contraction.

Volumes of incoming new business were also down for the first time since the end of 2012, while employment held steady, ending a three-and-a-half year growth spurt.

Chris Williamson, Markit chief economist, said companies’ optimism was shot, adding the service sector’s performance, allied to those of manufacturing and construction, had nudged the UK closer to a recession.

He also said the situation was not being helped by speculation over economic policy, with measures alongside an interest rates cut still unclear.

He said: “It’s too early to say if the surveys will remain in such weak territory in coming months, leaving substantial uncertainty over the extent of any potential downturn.

“However, the unprecedented month-on-month drop in the all-sector index has undoubtedly increased the chances of the UK sliding into at least a mild recession.

“Service providers are certainly bracing themselves for worse to come, with a record drop in business confidence about the year ahead leaving optimism at its lowest ebb since February 2009.

“However, the extent of any downturn clearly depends to some degree on policy response.

“A cut in interest rates seems to be a foregone conclusion, though the extent and nature of other non-standard stimulus measures remains a far greater source of uncertainty.”

Earlier this week, Markit revealed the construction sector has slumped to a seven-year low as Brexit uncertainty squeezes workloads and forces firms to cut jobs.

It also warned manufacturing has hit a three-and-a-half depression as referendum worries restrain companies and hit exports.