Economy defies expectations and Project Fear referendum scaremongering to grow by 0.7%
Data proves there was “no sign of an immediate shock to the economy” from the EU referendum result
Britain got a Brexit growth boost despite Project Fear referendum scaremongering, new figures revealed today.
Output in Britain’s huge services sector “grew strongly” in July, despite warnings of a massive economic slowdown in the wake Britain’s landmark vote to quit the EU.
Official figures published on Friday showed that our services output expanded by 0.4 per cent in the first month after the referendum.
The leap was driven by rising retail sales and a booming film and computer programming industries.
The good news came as the Office for National Statistics revised its forecasting of the health for the UK economy up for the months running up to polling day.
The economy actually grew by 0.7 per cent the second quarter of this year, up from a previous ONS estimate of 0.6 percent in Gross Domestic Product for the April to May period.
Darren Morgan, head of GDP at the ONS, said the new data proved there was “no sign of an immediate shock to the economy” from the EU referendum result.
He added: “Despite some very weak indicators appearing in the immediate aftermath of the referendum, estimates gathered by the ONS from more than 23,000 firms now suggest that the services sector, which accounts for three quarters of the economy - in fact grew strongly in July.”
The news was welcomed by bosses union the Institute of Directors, who said: “consumer spending and the service sector were both resilient and have kept the UK’s economy buoyant.”
Michael Martins, top economist at the IoD, explained that this was “likely because just over half of the British population is happy with the referendum result and so have not curtailed spending.”
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But they warned: “At the same time, several trends make this unlikely to continue.”
“Sterling depreciation following the referendum result will lead to increased inflation as the cost of imports increases.
He added: “Sterling will likely depreciate further once Article 50 is triggered.”
The fresh data from the ONS also showed household spending rose by 0.9 per cent in the second quarter, but growth in disposable income hit 0.6 per cent in the three months to June, down from 0.8 in the first three months of the year.
The amount of household income not spent came in at 5.1% in the second quarter — alarmingly its lowest level since 2008.
Scott Corfe, director at the Centre for Economics and Business Research, said the results for services come as a “huge sigh of relief”.
However, he warned: “Economic growth has been partly driven by UK consumers becoming less cautious and saving less.”
It also emerged on Friday that Britain’s yawning current account deficit - which measures the amount of money flowing in and out of the economy - grew to £28.7 billion in the second quarter, up from £27 billion in the first three months of the year.
Also official figures for the construction industry showed that output flat-lined in July, while manufacturing saw a sharp month-on-month contraction over the period, falling 0.9 per cent.