Economy back on track as upbeat Brits splash out

BRITAIN’S recovery looks set to have strengthened in recent weeks despite doom-laden warnings that the prospect of Brexit is hurting the economy.

Official figures yesterday showed retail sales rose 0.9pc in May and were up 6pc on the same month last year – a far stronger performance than expected.

Clothing sales jumped by 4.3pc in May alone – the biggest rise in over two years – boosted by better weather.

Scott Bowman, UK economist at Capital Economics, said the rise in sales ‘suggest EU referendum uncertainty hasn’t held back spending on the high street’.

The report, from the Office for National Statistics, followed similarly upbeat news about jobs, trade, manufacturing and construction in recent weeks.

The Ernst & Young Item Club said the pace of recovery in the UK looks to have picked up in the second quarter following growth of 0.4pc in the first three months of the year.

Martin Beck, senior economic advisor to Item, said: ‘May’s sales numbers set up the second quarter for a very healthy performance. With a strong per- formance from manufacturers and construction firms in April, it is looking increasingly likely that growth will see an increase on the first quarter.’

The flurry of good news appeared to undermine claims by the Remain camp – led by David Cameron and George Osborne – that the threat of Brexit is damaging the economy. Official figures this week showed unemployment has fallen to 5pc – its lowest level since October 2005 – in a sign businesses continue to hire staff.

Bumper retail sales figures also appear at odds with a stark warning from the Bank of England yesterday that uncertainty over the outcome of next week’s referendum has led to people putting off buying cars and houses.

‘While consumer spending has been solid, there is growing evi- dence that uncertainty about the referendum is leading to delays to major economic decisions that are costly to reverse, including commercial and residential real estate transactions, car purchases and business investment,’ the Bank said as it held interest rates at 0.5pc.

Matthew Elliott, chief executive of campaign group Vote Leave, said: ‘All the latest indicators show that the British economy is doing well despite George Osborne and Mark Carney’s attempts to whip up fear in the markets.’

John Hawksworth, chief economist at PwC, said: ‘UK consumers, buoyed by the strong fundamentals of jobs growth and rising real earnings, seem so far to have largely shrugged off the effects of uncertainty related to the EU referendum.’