A U.K. services gauge eased in December as risks including a British exit from the European Union weighed on hiring and business expectations fell to a three-year low. The purchasing-managers’ index published by Markit Economics on Wednesday fell to 55.5 from 55.9 in November. Economists in a Bloomberg survey had forecast a reading of 55.6. Markit said the report together with its latest surveys of manufacturing and construction indicates the economy grew 0.5 percent in the final quarter of the year, down from the 0.6 percent it estimated last month. The findings suggest the domestic economy, which has been the bulwark of growth, may have its own troubles as firms prepare for an increase in the minimum wage, continued fiscal austerity and a referendum on whether Britain should stay in or leave the EU that could be held this year. The survey will be closely watched by Bank of England officials, who announce their next policy decision on Jan. 14. The pound was trading 0.2 percent lower at $1.4649 as of 10:26 a.m. London time. “Firms are becoming more cautious in the face of growing uncertainties,” said Chris Williamson, chief economist at Markit. “The cost impact of the living wage, government spending cuts, a potential hike in interest rates, global economic growth jitters and of course ‘Brexit’ are all weighing on business minds.” Rate Forecast While the December reading remains above the long-run survey trend—indicating solid overall growth—a measure of employment slowed to a five-month low and firms’ expectations for activity over the next 12 months were the weakest since February 2013, Markit said. Surveys this week showed manufacturing growth cooled last month while construction accelerated more than economists expected. A composite index eased to 55.3, pointing to growth picking up slightly in the fourth quarter from 0.4 percent in the previous three months, Markit said. Services account for about three quarters of U.K. output. With the EU vote looming, oil prices falling and wage growth recently coming in weaker than expected, ING Bank NV said on Wednesday it now expects BOE policy makers to refrain from increasing their key interest ratefrom a record-low 0.5 percent until the end of the year. ING previously predicted a move in the second quarter. “Uncertainty surrounding the EU referendum is building, with a vote looking increasingly likely to occur this year rather than next,” James Smith, an economist at ING, said in a note to clients. “The Bank of England has some room to keep policy loose until the Brexit uncertainty passes. Consequently, we now expect the first rate hike to come in November, with a steady series of rate rises through 2017.”