EU uncertainty blamed for dramatic drop in construction figures

Construction purchases in June fell to their lowest level in seven years, according to new Purchasing Managers' Index figures released by Markit and the Chartered Institute of Prrocurement & Supply today. The Index was recored at 46 in June – above 50 indicates growth, below 50 contraction –its lowest level since 2009. Uncertainty over the economy in the run up to the EU referendum is being blamed for the dramatic drop in growth of orders.

"The extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post-Brexit economic outlook," Markit's senior economist, Tim Moore, told the BBC.

Markit also said firms are reporting clients' reluctance to start new contracts in the run-up to the referendum, as well as continuing uncertainty about the general economic outlook.

Government has sought to reassure investors in infrastructure at least, restating its commitment to investment in roads and railways and the Northern Powerhouse initiative. The contenders for the Conservative Leadership election, including Andrea Leadsom, have pledged continuing infrastructure investment to boost the economy. Leadsom also promised to bring a swift decision on south east airport expansion as she launched her leadership bid.

Jim O'Neil, commercial sectretary to the Treasury and the man tasked with pushing through the government's Nortern Powerhouse project, has threatened to resign if he sees any reduction in the government's commitment to investment transport and other infrastructure in the north, the Financial Times reports.

While Chancellor George Osborne has sought to reassure him and investors that government is sticking with its plans, floating the idea of a substantial cut to Corporation Tax from 20% to below 15%, the Shadow Chancellor, John McDonnell, responded by saying this was not enough. "Cutting Corporation Tax will not encourage investement, because firms will just sit on that extra momney they can hold onto. It will make us a tax haven in Europe. What we, particularly the north, needs, is getting shovel ready projects moving now, to stimulate the economy," McDonnell said.