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UK economic growth confirmed at 0.6% in second quarter UK economic growth confirmed at 0.6% in second quarter
(35 minutes later)
A solid rise in consumer spending helped the UK economy power ahead in the months running up to the EU referendum, with little sign the vote hurt investment or the wider economy, official statisticians said. A rise in consumer spending helped the UK economy power ahead in the months running up to the EU referendum, with little sign the vote hurt investment or the wider economy, official statisticians have said.
The Office for National Statistics confirmed a previous estimate that GDP growth picked up to 0.6% in the second quarter from 0.4% in the first quarter.The Office for National Statistics confirmed a previous estimate that GDP growth picked up to 0.6% in the second quarter from 0.4% in the first quarter.
The figures will be a boost to chancellor Philip Hammond, who has repeatedly asserted Britain entered the post-referendum period from a position of strength. Economists said the second quarter would come to represent a high point for this year with growth set to grind to a halt over coming months as the vote to leave the EU hurts business confidence. The figures will be a boost to the chancellor, Philip Hammond, who has repeatedly asserted that Britain entered the post-referendum period from a position of strength. Economists said the second quarter would come to represent a high point for this year, with growth set to grind to a halt over coming months as the EU vote hurts business confidence.
0.6% rise in #GDP in Q2, unrevised from the preliminary estimate https://t.co/GzCRcoXayZ0.6% rise in #GDP in Q2, unrevised from the preliminary estimate https://t.co/GzCRcoXayZ
The April to June figures included data for a short period after the EU referendum on 23 June, statisticians noted. “There is very little anecdotal evidence at present to suggest that the referendum has had an impact on GDP in Quarter 2 2016,” they said. The April-to-June figures included data for a short period after the EU referendum on 23 June. “There is very little anecdotal evidence at present to suggest that the referendum has had an impact on GDP in Quarter 2 2016,” the ONS said.
The ONS provided more detail on what drove growth in this GDP update. Business investment rebounded, to be up 0.5% in the second quarter, compared with a fall of 0.6% in the first quarter. It provided more detail on what drove growth in this GDP update, with business investment rebounding 0.5% in the second quarter, compared with a fall of 0.6% in the first quarter.
Household spending rose 0.9% after a rise of 0.7% in the first quarter. It was the strongest quarterly growth in spending for almost two years and adds to evidence that strong employment, low interest rates and low inflation are buoying consumer sentiment.Household spending rose 0.9% after a rise of 0.7% in the first quarter. It was the strongest quarterly growth in spending for almost two years and adds to evidence that strong employment, low interest rates and low inflation are buoying consumer sentiment.
But net trade continued to drag on GDP growth as the gap between exports and imports widened further in the second quarter. Exports edged up 0.1% in the second quarter but imports grew by a much stronger 1%.But net trade continued to drag on GDP growth as the gap between exports and imports widened further in the second quarter. Exports edged up 0.1% in the second quarter but imports grew by a much stronger 1%.
In year-on-year terms, household spending was up 3%, the strongest growth since the end of 2007, before the financial crisis. Business investment was down 0.8% on a year earlier. Overall GDP was up 2.2% on the year.In year-on-year terms, household spending was up 3%, the strongest growth since the end of 2007, before the financial crisis. Business investment was down 0.8% on a year earlier. Overall GDP was up 2.2% on the year.
ONS chief economist Joe Grice said: “Today’s figures reinforce the picture that the economy grew strongly in April, and then remained relatively flat in May and June. The ONS chief economist Joe Grice said: “Today’s figures reinforce the picture that the economy grew strongly in April, and then remained relatively 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. “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.”“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 0.6% headline figure was as most City economists had been expecting, according to the consensus forecast in a Reuters poll taken last week. But many expect growth will slow in this July to September quarter.The 0.6% headline figure was as most City economists had been expecting, according to the consensus forecast in a Reuters poll taken last week. But many expect growth will slow in this July to September quarter.
There were already signs that the economy was losing momentum before the vote, based on figures for individual months in the second quarter, said Scott Bowman, UK economist at Capital Economics. The consultancy expects growth to fall to zero in the third and fourth quarters of this year.There were already signs that the economy was losing momentum before the vote, based on figures for individual months in the second quarter, said Scott Bowman, UK economist at Capital Economics. The consultancy expects growth to fall to zero in the third and fourth quarters of this year.
“Looking ahead, growth looks set to slow significantly in the second half of the year as uncertainty related to the Brexit vote takes its toll. The monthly output indices suggested that activity fell in May and rose only slightly in June, with almost all of the second quarter’s growth coming in April,” he said.“Looking ahead, growth looks set to slow significantly in the second half of the year as uncertainty related to the Brexit vote takes its toll. The monthly output indices suggested that activity fell in May and rose only slightly in June, with almost all of the second quarter’s growth coming in April,” he said.
“Admittedly, consumer spending appears to have held up fairly well since the referendum. But survey measures of business activity have taken large hits and a significant portion of firms say they will invest less as a result of the Brexit vote.”“Admittedly, consumer spending appears to have held up fairly well since the referendum. But survey measures of business activity have taken large hits and a significant portion of firms say they will invest less as a result of the Brexit vote.”