In August, UK services PMI plunged from 55.4 to 51.1, almost equalling the record 4.5-drop seen in April 2001, while the consensus was looking for a more moderate decline (to 54.0). While the services sector held up relatively well in the second quarter, this outcome suggests that the UK’s dominant sector is losing steam too. Also the all-sector index dropped sharply, from 54.3 to 50.9, the lowest reading since June 2009 and an outcome which is consistent with GDP contracting at a quarterly rate of 0.2% Q/Q, according to Markit. After sluggish growth in the previous quarters, this outcome raises fears that the UK economy might fall back into recession as the services sector is now faltering too after the manufacturing sector contracted already in the second quarter. While we believe that the BoE is unlikely to ease policy already this week, the case for more QE might have gained weight.