The U.K. economy grew by 0.6% quarter-on-quarter, the data showed, and by 2.2% from the same period past year.
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Spending by households saw the strongest increase since 2014, rising by 0.9 in the three months to June compared with the first quarter.
“Our survey returns, which include the period leading up to and immediately following the referendum, show no sign so far of uncertainty having significantly affected investment or GDP”. The numbers out today also offer a more detailed picture of household spending, which rose by 0.9 per cent – a healthy sign in that this is the best quarterly increase for two years. “That both consumer spending and business investment picked up ahead of the vote may indicate more resilience to Brexit uncertainty than anticipated”.
The latest second quarter growth number was in line with market expectations.
It is important to note, however, that the reading covers the three months to 30 June 2016, and as such provides us with little colour on how the United Kingdom is performing post-referendum.
In the run-up to the referendum, we heard repeated warnings that, whatever the outcome of the actual vote, the damage to the United Kingdom economy had been done.
Martin Beck, senior economic advisor to the EY ITEM Club, said that the data only reflects the pre-referendum period and that a future slowdown was still likely.
The rise in businesses investment last quarter was driven by spending on transport equipment including cars and planes, the ONS said. “If we see the government propose a new policy of fiscal stimulus in the autumn, it will be a key buffer against Brexit-related fallout”. The level of investment was 0.8 percent lower than a year earlier, and surveys suggest companies are planning to scale back spending plans. The economy will contract by 0.1 percent in the third quarter, according to economists polled by Bloomberg between August 5 and August 12.
The UK economy grew 0.6% during a second quarter that concluded with the 23 June vote to leave the European Union, aided by the biggest uptick in industrial production since 1999, according to official data. “On the positive side, the sharply weakened pound should boost exports”.
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Jonathan Chitty, Investment Analyst at Brown Shipley, added: “Aside from declines seen in agriculture and construction the survey illustrates that the United Kingdom economy was doing well in the second quarter, with output now around 8% higher than the pre-financial crisis peak”. But survey measures of business activity have taken large hits and a significant portion of firms say they will invest less as a result of the Brexit vote. The monthly output indices showed that activity fell in May and rose only slightly in June, with nearly all of the second quarter’s growth coming in April.
