REUTERS/Roni Bintang

On Monday morning, Markit released its latest set of data on the state of the UK’s construction sector, and to say things didn't look good would be an understatement.

The sector slipped into contraction for the first time since April 2013, hitting just 46.o, a shock fall from an already poor base last month, and the biggest single month fall since 2009. All this helped confirm fears about a coming crash in the UK's construction industry.

Generally speaking, Markit doesn’t make grand proclamations and or use strong language about its data, but on Monday representatives from both Markit and CIPS, which jointly produced the survey, variously said that "the rate of decline was not as sharp as that experienced during the last recession" and called the data "a clear warning flag for the wider post-Brexit economic outlook."

When the best you can pull from a dataset is that it is not quite as bad as during the worst recession since the 1930s, you know things are not looking good.

Here's the chart showing just how sharply construction fell last month:

View photos markit july 4 skitch More

REUTERS/Roni Bintang

While it is less than two weeks since Britain voted to leave the European Union, it is already clear that uncertainty and fear stemming from the result are now predominating in almost everything people do. The Bank of England has already warned that it will likely have to act to combat a coming economic storm by implementing a programme of quantitative easing and rate cuts, and there is some evidence that firms are already delaying investment in the UK, with several major multinationals even thinking about pulling jobs from the country in the wake of the Brexit vote.

Brexit's effect on the economy is undoubtedly going to be huge. If predictions are right households are going to defer consumption, and more and more firms will delay investment. That, in turn will lower demand for labour and push up unemployment. Britain is going to slip into recession and things are going to get very messy very fast.

The big thing that is going unnoticed however, is that even pre-Brexit, the UK economy looked to be heading in the wrong direction. Sure some of that pre-referendum slowdown could be put down to jitters about the result, but that goes only some way to explaining why Britain's economy simply hasn't performed in the way it should have. While Brexit is weighing on the industry and the wider economy to some extent, it certainly isn’t the only thing causing trouble.

Here's an extract from a Pantheon Macroeconomics note back in May (emphasis ours):

It is hard, however, to attribute the decline in consumer goods demand solely to Brexit risk. Consumer confidence has ebbed lately, but it has remained high by past standards. We think that weaker demand for consumer goods reflects a fundamental slowdown in households’ real income growth. Inflation is slowly picking up, employment growth has faded markedly, and welfare spending cuts intensified in April.

Monday's construction contraction coincides with a fall in UK GDP growth. Last week, the ONS confirmed that GDP growth fell to just 0.4% in the first quarter of 2016, meeting expectations, but well below the 0.6% growth seen in Q4 of last year. When the GDP figures were first released back in May, the fall was quickly dismissed by chancellor George Osborne as a reflection of fears surrounding the impending Brexit vote, but that explanation only went part of the way to explaining what caused the slide.