Source: Financial Times
The UK economy accelerated to its fastest quarterly growth rate in almost two years over the summer but economists warned that with Brexit uncertainties curbing spending, the performance would soon decline.
The amount of goods and services produced in Britain grew 0.6 per cent in the third quarter of the year, following 0.4 per cent in the previous three months, and considerably higher than the recent trend.
But the economy lost momentum towards the end of the third quarter: growth in gross domestic product fell to zero in August and September, according to official data.Suren Thiru, head of economics at the British Chambers of Commerce, said the economy’s strength over the summer had been caused by several temporary factors, including the heatwave, the football World Cup and a royal wedding.
“Persistent Brexit uncertainty and the financial squeeze on consumers and businesses [are] likely to weigh increasingly on economic activity in the coming quarters,” he added.
In the three months to September 30, exports and household spending were strong, offset by declining business investment, which fell for the third consecutive quarter.Philip Hammond, chancellor, said the data from the Office for National Statistics demonstrated “underlying strength in our economy”.
But some economists pointed to recent weak business surveys, which suggested the summer was an unusual period.George Buckley, economist at Nomura, said the most concerning element of the ONS data was the 1.2 per cent drop in business investment in the third quarter.
He added that “expectations for the final quarter of the year should be for something materially less than the 0.6 per cent quarterly growth rate we’ve seen today”.
Yael Selfin, economist of KPMG, said “the upward momentum we have seen this quarter is unlikely to last . . . as uncertainty around Brexit puts downward pressure on investment and relatively weak households’ finances rein in consumer spending”.