2018.04.0521:52:00UTC+00U.K. Economy Weighed Down by the ‘Beast From the East’ Snowstorm

Heavy snow and weak consumer demand weighed on British services businesses in March, which grew at the slowest rate since just after the vote to leave the European Union in June 2016, a survey showed. However, the 'Beast from the East' may not be enough to stop the Bank of England from pushing another interest-rate increase.

The IHS Markit/CIPS services Purchasing Managers' Index (PMI) dropped to 51.7 in March from February's reading of 54.5, its lowest reading since July 2016.

Britain's construction PMI showed a similar decline on Wednesday, although manufacturing held up better.

Looking at the first three months of 2018 as a whole, the figures suggest Britain's economy expanded at a quarterly rate of just below 0.3 percent, down from an already-modest 0.4 percent at the end of 2017, IHS Markit said.

Reports this week showed snow and storms weighed on growth in services to its weakest in almost two years, and saw the construction industry contract for the first time in six months. While the pound fell after the services report, investors are still pricing in an around 85 percent likelihood of the BOE hiking rates in May.

The BOE has already factored in the hit from the bad weather, and downgraded its own estimate for the quarter. According to Markit, that means the Monetary Policy Committee's widely expected rate hike in May is still on the cards.

Not all the weakness in the PMI was weather-related, though.

IHS Markit said British services businesses reported weak consumer demand as well as concern about the country's departure from the EU in a year's time as being behind the slowest growth in new orders since July 2016.