LONDON: Consumers and businesses increased their spending in the third quarter as the UK economy registered a resilient performance following the Brexit vote.
Household spending rose 0.7 per cent from the second quarter and business investment increased 0.9 per cent, the Office for National Statistics said on Friday. Growth overall was unrevised at 0.5 per cent, with trade providing the strongest contribution.
The report covers the first full quarter of GDP since Britons upended UK politics and roiled financial markets by voting to leave the European Union. While there are few signs of any significant effect for now, growth is expected to slow next year.
In its twice-yearly review, the Office for Budget Responsibility on Wednesday slashed its 2017 forecast to 1.4 per cent. Uncertainty will lead firms to delay investment while the falling pound squeezes consumers by pushing up the cost of imports, it said.
“Investment by businesses held up well in the immediate aftermath of the EU referendum, though it’s likely most of these investment decisions were taken before polling day,” said ONS statistician Darren Morgan. “That, coupled with growing consumer spending fuelled by rising household income, and a strong performance in the dominant service industries, kept the economy expanding broadly in line with its historical average.”
Net trade added 0.7 percentage point to GDP in the three months through September as exports rose 0.7 per cent and imports fell 1.5 per cent. That represents the biggest contribution from trade since the start of the 2014 and the first this year.
An index of the dominant services industry rose 0.2 per cent in September, leaving output 0.8 per cent higher on the quarter. Industrial production and construction declined.