British economy picks up speed in second quarter

British economy picks up speed in second quarter

British economy picks up speed in second quarter

AFP photo

Britain’s economic growth unexpectedly accelerated in the second quarter in the run-up to the nation’s shock EU exit referendum, official data showed on July 27.

Gross domestic product (GDP) grew 0.6 percent, the Office for National Statistics (ONS) said in a first estimate for April-June, which included the shock EU exit referendum towards the end of the period.

That beat market expectations for 0.5-percent growth, as activity was boosted by rebounding industrial production, and followed 0.4-percent expansion in the first quarter.

“Today’s GDP figures show that the fundamentals of the British economy are strong,” said Conservative finance minister Philip Hammond.

Chancellor of the Exchequer Hammond added Britain was in a strong position to negotiate its departure from the European Union, after Britons voted on June 23 in favor of Brexit.  
“In the second quarter of this year our economy grew by 0.6 percent - faster than was expected,” he said.
“Indeed we saw the strongest quarterly rise in production for nearly twenty years, so it is clear we enter our negotiations to leave the EU from a position of economic strength.”

Hammond the government had the tools to support the economy as it entered a “period of adjustment.”
Economic activity was driven by particularly strong growth in industrial production - which expanded by 2.1 percent.

That compared with a 0.2-percent decline in the previous three months and matched figures last seen in the third quarter of 1999.

The services sector meanwhile grew 0.5 percent in the second quarter, but this was offset by falls in agriculture and construction.

Scotiabank economist Alan Clarke added that the second quarter was not rocked by “intense” worries over Brexit - because many had expected Britain to remain in the EU.

“The outcome of the referendum was a real surprise,” said Clarke.

“Most people thought the UK would vote to stay in the EU, so the pre-vote jitters were probably not as intense as feared.”   

Much has been changed by the Brexit vote, however. 

“The collapse in all surveys of activity and confidence undertaken since the referendum suggest GDP is on course to contract in Q3,” Pantheon Macroeconomics’ chief UK economist Samuel Tombs said.