UK economy grew faster than expected in run-up to EU vote

Quarterly GDP figures, calculated by the Office for National Statistics in Newport, are the key measure for gauging the health of the United Kingdom economy.

According to preliminary data, the United Kingdom economy grew at a pace of 2.2% on a year-over-year basis during the second quarter, compared to 2% in the first quarter.

The ONS said pick-up in growth was driven jointly by the services sector and industrial production, the latter of which expanded 2.1 per cent on the quarter ― its best performance since 1999.

The standout sector performers in the first Q2 estimate from April to June were production, up 2.1% on the previous quarter, and services up 0.5%.

“It’s always hard to tell where you’re going by looking in the rear-view mirror, and as such today’s GDP figures can’t be taken as evidence of the current climate”, added said However, what they do show is an absence of pre-Brexit concerns, meaning that if the forecast downturn does materialise, at least we start from a position of relative strength”.

However, construction output fell by 0.4% and the agriculture sector shrunk by 1%.

That exceeded the 0.4% growth rate notched up in the first three months of the year and was faster than the 0.4% rate economists polled by The Wall Street Journal were expecting. Indeed, we saw the strongest quarterly rise in production for almost 20 years, so it is clear we enter our negotiations to leave the European Union from a position of economic strength.

But he warned tougher times lay ahead, adding: “Those negotiations will signal the beginning of a period of adjustment, but I am confident we have the tools to manage the challenges ahead, and, along with the Bank of England, this Government will take whatever action is necessary to support our economy and maintain business and consumer confidence”.

A business survey last week suggested there had been a sharp fall in economic activity in the weeks after the referendum.

The MPC will vote on whether or not to slash the cost of borrowing on Thursday August 4, when it will also deliver its inflation report.