UK economy def ies the gloom mongers to grow even faster

BRITAIN’s economy has fared better than previously thought since the vote to leave the European Union, official figures reveal.

The Office for National statistics said the economy grew at an annual rate of 1.7 per cent in the third quarter of this year, up from the 1.5 per cent previously.

In a set of unexpected revisions, the ONs also upgraded its growth figures for 2016, thanks to a stronger six months after the referendum.

The 1.9 per cent growth rate recorded last year put the UK alongside Germany as the best-performing economy in the G7 in 2016.

Between July and september this year manufacturers enjoyed their best quarter since early 2011 as exports soared. Analysts said the figures mean the latest forecasts from the Office for Budget Responsibility, Bank of England and IMF now look too pessimistic.

However, household spending rose by just 1 per cent – its weakest pace since 2012. The report came just a day after the ONs said government borrowing has fallen to a ten-year low as tax receipts pour in.

Earlier this week, the pro-Brussels Confederation of British Industry said manufacturing order books are at a 30-year high in a further sign that the country continues to prosper ahead of Brexit.

And the ONs last week said unemployment has fallen to a 42-year low of 4.3 per cent.

Ian stewart, chief economist at Deloitte, said: ‘The UK’s performance has been rather better than the gloomy talk would suggest. Growth has come in stronger than expected a year ago and the pace of activity has edged up since July.’

The ONs report showed the UK had 0.3 per cent growth in the first and second quarters this year, with expansion of 0.4 per cent in the third. Exports leapt 8.3 per cent.

The Ernst & Young Item Club raised its growth forecasts for the full year from 1.6 per cent to 1.7 per cent while scotiabank pencilled in 1.8 per cent. That compares with 1.5 per cent expansion predicted by the OBR in the Budget last month and the 1.6 per cent forecast by the Bank of England and IMF.

By contrast, the scottish Fiscal Commission downgraded GDP forecasts in last week’s scottish Budget. It predicted annual growth of less than 1 per cent for the next four years with scotland’s economy lagging behind the UK’s.

Delivering her doom-laden outlook for the UK this week, IMF managing director Christine Lagarde said Brexit was ‘already having an impact on the economy even though the UK is not expected to leave the EU until 2019’.

But scotiabank economist Alan Clarke said: ‘The IMF got loads of headlines for downgrading their forecasts but they should have waited for this data.’

Comment – Page 18

‘Pace of activity has edged up’