UK economy picks up some speed, Brexit hurdles ahead

UK economy picks up some speed, Brexit hurdles ahead

   August 10, 2018  
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UK economy picks up some speed, Brexit hurdles ahead

Britain’s economy picked up some speed in the second quarter after a sharp winter slowdown in early 2018 but lost momentum in June, underlining its stuttering performance ahead of Brexit in less than eight months’ time.

Gross domestic product expanded 0.4 percent in the April-June period, as expected in a Reuters poll of economists, the Office for National Statistics said.

The economy’s annual growth rate picked up slightly to 1.3 percent in the second quarter, only a touch above a nearly six-year low of 1.2 percent at the start of the year.

Sterling, shaken over the last week by growing talk of a no-deal Brexit, was little moved by the data which painted a familiar picture of growth led by the services sector while businesses were reluctant to raise investment much.

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Britain’s economy slowed after the 2016 vote to leave the European Union and is expected to continue to expand at a weaker pace than most other developed economies as the March 2019 Brexit date approaches.

But news that the economy recovered from its winter slump is likely to reassure Bank of England policymakers who last week raised interest rates to a new post-financial crisis high of 0.75 percent despite concerns about the approach of Brexit.

Britain’s government has yet to agree a divorce deal with Brussels and has stepped up planning for the possibility of leaving the bloc without any formal agreement.

“We fear the chill winds from Brexit will only intensify unless the withdrawal agreement is signed off soon,” economist Samuel Tombs of consultancy Pantheon Macroeconomics said.


The ONS said the economy had been helped in the second quarter by retail sales and construction recovering from heavy snow earlier in the year.

“However, manufacturing continued to fall back from its high point at the end of last year and underlying growth remained modest by historical standards,” ONS statistician Rob Kent-Smith said.

In June alone, the economy grew 0.1 percent after a 0.3 percent rise in May, weaker than forecasts in the Reuters poll for a 0.2 percent expansion, the ONS said.

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