UK GDP grows at fastest pace in 2 years

Britain’s economy has grown at the fastest pace in nearly two years, as strong exports and solid household spending offset slumping business investment, data showed yesterday awaiting a Brexit deal.

Gross domestic product climbed by 0.6 per cent in the third quarter, in line with analysts’ expectations and up on growth of 0.4 per cent in the second quarter, the Office for National Statistics (ONS) said.

At 0.6 per cent growth for July-September, GDP was the strongest reading since 2016’s fourth quarter.

Analysts meanwhile expect the economy to cool ahead of Britain’s departure from the European Union in March, starting with the current fourth quarter.

“It seems unlikely the economy will be able to keep up this pace with Brexit uncertainty hanging over it,” noted Thomas Pugh, UK economist at Capital Economics research group.

The ONS said third quarter growth was driven by an expansion of 0.3 per cent in July, “which stemmed from strong retail sales boosted by warm weather and the World Cup, as well as a low base reflecting the weaker start to the year”. It added: “The recent subdued business investment environment is consistent with external surveys of investment intentions, which attribute much of the weakness to Brexit-related uncertainty.”

Business investment slid 1.2 per cent in the quarter, while exports jumped 2.7 per cent and household spending increased 0.5 per cent. “The export growth ... reflects an increase in both goods and services exports, with goods exports to non-EU countries growing more robustly than to the EU,” the ONS noted.