UK Economic Growth Hits Two-Year High
LONDON (Dispatches) - The UK economy expanded at the fastest pace in two years during the third quarter, but has begun showing signs of a slowdown ahead of Brexit as more business investment decisions are put on hold.
In what is likely to be a peak for the economy this year, the latest snapshot from the Office for National Statistics (ONS) showed GDP growth in the three months to the end of September was 0.6% – the fastest expansion since the final quarter of 2016.
But growth has begun to falter as the boost to the economy from the warm weather over the summer and England’s performance at the World Cup has fizzled out.
GDP growth flatlined in August and September, with signs of weakness in business spending, retail sales and a fall in domestic car purchases.
City economists had forecast growth of 0.1% in September, although the UK economy unexpectedly stagnated for the second month in a row, as new car registrations fell by a fifth in the worst September for the motor trade in a decade.
Although there are gathering signs of weakness as the country braces for Brexit on 29 March next year, on an annual basis, the British economy grew by 1.5%.
Philip Hammond, the chancellor, said on a visit to the Fuller’s brewery in London just two weeks after the budget that the growth rate was “proof of the underlying strength in our economy”.
There are however mounting signs of underlying weakness as Theresa May struggles to agree a Brexit deal with the EU, and business investment dropped at the fastest rate since early 2016. The latest figures reveal a contraction in corporate spending of 1.2% during the third quarter, which was the first time business investment has slipped for three consecutive quarters since the global financial crisis a decade ago. Azad Zangana, senior European economist at the City fund manager Schroders said concerns over Brexit were among the reasons for businesses delaying investment decisions.