AHEAD OF BREXIT VOTE, UK’S ECONOMY THRIVES
The UK’s economy, in the three months ending June this year, grew by a better than expected 0.6% (2.2% on a yearly basis), according to the latest data released from the Office for National Statistics (ONS).
These figures showed an increase in economic growth in the period – just prior to the Brexit referendum on June 23rd – albeit most of this being seen in April, before falling off in May and June.
One of the major driving factors of this growth in the overall Gross Domestic Product (GDP) was the biggest increase in industrial production seen since 1999, which was estimated to have grown by 2.1% in the quarter. Most of this came via the pharmaceutical and car industries. There was also strong growth within the services sector, which makes up over 75% of the country’s GDP, as it grew by 0.5%, with the retail sector leading the way.
However, on the negative side, the agricultural and construction sectors contracted by 1% and 0.4% respectively.
The Chief Economist at the ONS, Joe Grice, commenting on these findings, was quoted as saying: “Any uncertainties in the run-up to the referendum seem to have had a limited effect. Very few respondents to ONS surveys cited such uncertainties as negatively impacting their business.”
Meanwhile, the new Chancellor of the Exchequer, Philip Hammond, in one of his first public utterances said: “It is clear we enter our negotiations to leave the EU from a position of economic strength.”
Whilst this (as always) retrospective data is encouraging, immediate post-Brexit data, coming from the closely followed Markit Purchasing Managers’ Indexes (PMIs), showed a sharp drop in economic output from the industrial sector, with it actually registering negative growth.
As a result of these contrary economic indicators, the British Chambers of Commerce commented that it was “far too soon to draw firm conclusions” with regard to the UK’s immediate future growth.