Little evidence UK economy hit by Brexit says report

Business investment appeared to show no impact from Brexit uncertainty. Picture: AFP/Getty Images
Business investment appeared to show no impact from Brexit uncertainty. Picture: AFP/Getty Images
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The UK economy continued to grow in the run-up to the Brexit vote, with “very little anecdotal evidence” to suggest it had been hit by uncertainty surrounding the EU referendum.

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.6 per cent in the second quarter, up from 0.4 per cent in the first three months of 2016.

Economists had pencilled in second quarter GDP growth to be unchanged at 0.6 per cent.

In its second estimate for the period, the ONS said: “There is very little anecdotal evidence at present to suggest the referendum has had an impact on GDP in Quarter 2 2016.”

Business investment appeared to show no impact from uncertainty ahead of the EU referendum vote, increasing 0.5 per cent in the second quarter compared with the first quarter.

Household spending also shrugged off Brexit jitters to grow 0.9 per cent in the three months to June, rising from 0.7 per cent in the quarter before.

Joe Grice, ONS chief economist, said the second quarter GDP result reinforced the picture that the economy grew strongly in April, but remained flat in May and June.

“Business Investment grew in the second quarter, partly thanks to companies spending on transport equipment such as cars and planes. However, levels of investment remained lower than at the same period last year.

“Our survey returns, which include the period leading up to and immediately following the referendum, show no sign so far of uncertainty having significantly affected investment or GDP.”

The second quarter expansion was driven by the strongest performance from industrial production since 1999, rising 2.1 per cent over the period compared with a 0.2 per cent fall in the quarter before.

Britain’s dominant services sector, which accounts for around 79 per cent of the UK economy, also grew by 0.5 per cent in the second quarter, edging down from 0.6 per cent in the first three months of the year.

Output for the services sector grew by 0.2 per cent between May and June, picking up from flat growth between April and May, the ONS said.

Many economists had tipped the UK economy to maintain momentum ahead of Britain’s vote to leave the European Union.

A recent slew of official data covering the first month after the Brexit vote suggests the British economy is also faring better than initially expected.

Warm weather spurred retail sales towards a higher-than-expected rise of 1.4 per cent in July while the number of people on jobseeker’s allowance tumbled 8,600 to 763,000 between June and July.