In the principal study of business certainty since the submission on 23 June, the administrations division was especially hard hit, demonstrating its greatest drop on record.
With assembling dropping to its most minimal level since February 2013, the study proposes UK GDP could contract by 0.4% in the second from last quarter, as per Markit, which arranges the information in its buying administrators' file (PMI).
The administrations record dropped from 52.3 in June to 47.4, a 88-month low, while producing tumbled from 52.1 in June to 49.1.
Chris Williamson, the central market analyst at Markit, said: "July saw an emotional crumbling in the economy, with business action drooping at the quickest rate subsequent to the tallness of the worldwide monetary emergency in mid 2009.
"The downturn, whether showing itself all together book cancelations, an absence of new requests or the deferment or ending of undertakings, was most ordinarily credited in somehow to Brexit.
"At this level, the review is flagging a 0.4% compression of the economy in the second from last quarter, however much, obviously, relies on upon whether we see a further crumbling in August or if July speaks to a stun actuated nadir. Given the record droop in administration part business desires, the recommendation is that there is further torment to come in the transient at any rate.
"With policymakers holding up to see hard information on the condition of the economy before considering more jolt, the droop in the PMI will give a capable contention to quick activity."
Chancellor Hammond told Sky News that the PMI report demonstrated that the Brexit vote has harmed opinion.
"It lets us know that individuals' certainty, organizations' certainty has been imprinted. They're not certain, there're in a position of vulnerability now," said Hammond, in the wake of meeting with Chinese policymakers in Beijing.
"Our employment is to reestablish as much sureness as we can, as fast as possible."
Sterling quickly tumbled by 1% against the US dollar, or more than one penny, to $1.31as speculators wager on an August loan fee cut from the Bank of England, which additionally helped the FTSE 100 make progress after early misfortunes.
Samuel Tombs, of Pantheon Economics said the PMI report was "woeful" and ought to incite the Bank of England to cut financing costs, while Neil Wilson, of ETX Capital, portrayed the information as "genuinely appalling."
The MP Chris Leslie, a previous shadow chancellor, tweeted: "Center goes into break while economy goes into droop. Treasury pastors – both frontbenches in reality – wake up now!"
James Smith, a business analyst at ING Bank, said: "This [report] bonds our perspective that the Bank of England will convey extra jolt when they discharge their August expansion report. We expect a 25 premise point rate cut and an underlying £50-60bn round of quantitative facilitating (possibly with an extra add up to take after over coming months) to balance a portion of the monetary effect of increased vulnerability."
Zach Witton, the vice president financial expert at the makers association EEF, said: "Assembling appears to climate the tempest marginally superior to the administrations segment, as producers have seen fairly a support in fare orders taking after the deterioration in sterling. However the other side is a spike in information costs as the weaker sterling is pushing up import costs.
"The sharp respite in action shows that makers have responded to the stun of the choice result by embracing a keep a watch out methodology. A key inquiry is to what extent this will be maintained, as an inability to restart movement will have suggestions for their longing for venture and enrollment, and consequently have a suggestion for the genuine economy.
"The vulnerability encompassing the standpoint for assembling highlights that there is potential for the administration to shore up trust in the coming months."