Strong economic Q4 growth in the UK, driven by free-spending consumers, has confounded Brexit vote slowdown warnings.
Britain enjoyed robust economic growth in the final three months of last year – rising by 0.6 percent from the previous quarter.
That completely undermined the warnings that June’s vote for the UK to leave the European Union would cause an immediate slowdown in the country’s economy.
0.6% rise in #GDP in Q4 2016, with growth dominated by the service sector https://t.co/B1ssP0gbL3
— ONS (@ONS) January 26, 2017
Finance minister Philip Hammond said it was further evidence of “fundamental strength and resilience” but added: “There may be uncertainty ahead as we adjust to a new relationship with Europe.”
And here's my reaction to this morning's
ONS</a> GDP figures <a href="https://t.co/ycQHgiPZdt">pic.twitter.com/ycQHgiPZdt</a></p>— Philip Hammond (PHammondMP) January 26, 2017
Economists pointed out that the growth is very reliant on consumers continuing to spend freely. The weaker value of the pound is causing inflation to rise which is squeezing purchasing power which means the outlook for 2017 remains murky.
Much of that spending is being financed by borrowing which rose at the fastest pace in more than 11 years in November.
Services, which are most sensitive to consumer spending, were the biggest gainers, up by 3.0 percent from the same period in 2015 and much stronger than agriculture, production, manufacturing and construction.
Commenting on today’s GDP figures https://t.co/kgCNTpOfZD, Head of GDP
ONS</a> Darren Morgan said: <a href="https://t.co/MF9xGH42La">pic.twitter.com/MF9xGH42La</a></p>— ONS (ONS) January 26, 2017
For all of last year growth was 2.0 percent, down only slightly from 2015’s 2.2 percent, and narrowly beating Germany’‘s 1.9 percent.
The Confederation of British Industry just reported strong orders for manufacturers in January, suggesting a strong start to 2017 for the country’s factories.