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* Analysts say slowdown priced in and expect it to continue
* Holidays, homes and flights seen as less affordable
By Paul Sandle
LONDON, June 27 (Reuters) - Airlines, holiday companies andhousebuilders joined British banks in bearing the brunt ofBrexit-induced market turmoil on Monday, which analysts saidreflected expectations Britain was headed for recessionfollowing its vote to leave the EU.
The FTSE 250 index, which is more closely aligned tothe British economy than the multi-national heavy FTSE 100, was down 12.8 percent in the two days of trading sinceThursday's vote.
The FTSE 100 was down 5.2 percent, while sterling tumbled toa fresh 31-year low against the dollar and British 10-yeargovernment borrowing costs sank below 1 percent for the firsttime, as investors seek a respite from turbulent markets.
"UK lead indicators are already consistent with a recessionand will likely now worsen," Credit Suisse European equitystrategist Andrew Garthwaite said.
Globally the vote wiped $2.08 trillion off equity markets onFriday, the biggest daily loss ever.
British employers' group the Institute of Directors reportedthat a quarter of its members would put a freeze on recruitmentand 5 percent would make redundancies.
Its snap reaction survey of 1,092 members also found 22percent of companies were considering moving some of theiroperations outside the United Kingdom, whereas only 1 percentsaid they would bring operations back.
"A majority of business leaders think the vote for Brexit isbad for them, and as a result plans for investment and hiringare being put on hold or scaled back." IoD Director GeneralSimon Walker said.
Prime Minister David Cameron, business leaders, economistsand politicians from U.S. President Barack Obama to China'sPresident Xi Jinping had urged Britons to stay in the 28-memberbloc to protect global markets, trade and political stability.
EMPLOYMENT FEARS
Housebuilders were amongst the worst hit stocks, with thetwo biggest firms Barratt and Persimmon bothlosing 39 percent of their market value over the two days.
Canaccord analyst Aynsley Lammin said they were beingdragged lower by fears that the British economy could tip intorecession, leading to job losses and a seizing up of the housingmarket.
Scotiabank economist Alan Clarke said he had downgraded hisforecast for 2017 growth to zero from 2 percent.
"It could be deeper, I could be overly harsh, but I suspectwe will have a recession," he said, explaining that there wererisks to consumer spending - the driving force of the economy atthe moment - and investment.
Shares in British banks also plunged on Monday over the fallout from the shock result of the vote.
Fears about currency weakness and job security also hitairlines and travel stocks, with shares in hoteliers, airlinesand tour operators falling further on Monday after tumbling onFriday.
The International Air Transport Association predicted thenumber of air passengers could be 3-5 percent lower as a resultof economic weakness following the vote. It said the EU waseasily the biggest destination market from Britain, accountingfor 49 percent of passengers.
The impact is expected to be particularly pronounced forcarriers such as easyJet, down 21 percent, and Ryanair, which are predominantly focused on European markets.
IAG, comprising British Airways, Iberia, Vuelingand Aer Lingus, already warned on profit on Friday due toexpected lower demand for travel.
Brexit also calls into question EU agreements on openairspace that have fostered a huge expansion of air travel,creating uncertainty for both British and other EU airlines.
Shares in holiday group Thomas Cook were trading down 3.4percent after closing down 16 percent on Friday, both hurt bythe prospect of an economic downturn and the sharp drop in thepound making summer holidays on southern European beaches moreexpensive.
TUI Group, Europe's largest tour operator, is also expectinga hit due to the effect of translating from pounds to euros forits profit and loss account.
However, CFO Horst Baier said he doubted whether a sustainedweakening of the pound would dampen Brits' enthusiasm fortravel.
German daily Bild had over the weekend predicted thateconomic weakness in Britain following Brexit could mean fewerBritons fighting for space with Germans in popular Spanish beachresorts and lead to lower prices for trips.
(Additional reporting by Vicki Bryan and Sarah Young; editingby Philippa Fletcher)
