Spending booms as UK defies EU gloom

OFFICIAL figures are set to show the UK economy grew 0.4pc over the past three months – defying gloomy post-Brexit predictions.

A report by the office for National statistics published on Thursday is expected to show that a spending boom drove output in the third quarter of the year.

It comes as independent forecasts, which are monitored by the Treasury, reveal the economy is growing far better than expected. Economists, who slashed their forecasts after the Brexit vote, have revised up their growth estimates for the year to 1.9pc.

The figures will make a mockery of claims that a vote to leave the crisis-torn Brussels club would lead to economic catastrophe for Britain.

The Treasury warned that the economy would shrink by between 0.1pc and 1pc in the third quarter if voters backed Brexit.

In a report published in May, one month before the referendum, then chancellor george osborne said: ‘A vote to leave would represent an immediate and profound shock to our economy. That shock would push our economy into a recession and lead to an increase in unemployment.’

As recently as August, the Bank of England warned the UK ‘is likely to see little growth in the second half of this year’ and forecast expansion of just 0.1pc in the third quarter.

It is now widely expected that governor Mark Carney will be forced to tear up those forecasts when the central bank publishes its latest analysis next week and admit that he was far too gloomy. Deputy governor Ben Broadbent recently conceded there was ‘little doubt’ the economy has performed ‘somewhat more strongly’ than the Bank expected.

since the referendum on June 23, a series of figures have shown that the economy continued to prosper following the Brexit vote, leaving the doom-laden predictions of disaster in tatters.

House prices have soared to a record high with the value of the average home reaching £219,000 in August – up £17,000 on a year earlier.

Retail sales grew at the fastest rate since late 2014 in the three months following Brexit while employment has reached a record high and unemployment is at an 11year low of 4.9pc.

Broadbent has said the fall in sterling – the pound is down 18pc against the dollar and 14pc against the euro since the referendum – has acted like an important ‘shock absorber’ for the economy.

The weaker currency has boosted manufacturing and exports and made Britain more competitive on the global stage.

It is feared that the slump in the pound will drive up inflation, by making imports more expensive, although the most recent figures show the price of food has fallen since Brexit.