Quarterly GDP growth confirmed at 0.5%
In its second estimate of gross domestic product (GDP), ONS figures confirmed that the economy escaped a major slowdown in the three months after the Brexit vote thanks to a strong performance from Britain’s powerhouse services sector.
The ONS said that the numbers showed “limited effect so far from the referendum”.
ONS data also shows that business investment grew in the three months following the Brexit vote, despite fears that it would take a major hit in the wake of the referendum.
Business investment rose 0.9 per cent to £44.2 billion in the third quarter, compared to £43.8bn over the previous three months. The rise has been attributed to an increase in building investments.
However, on a year-on-year basis, business investment dropped 1.6 per cent from £44.9bn to £44.2bn, marking the third consecutive annual decline.
Darren Morgan, head of GDP at the ONS, said: “Investment by businesses held up well in the immediate aftermath of the EU referendum, though it’s likely most of those investment decisions were taken before polling day.
“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 historic average.”
The news comes days after it was revealed that the British economy is set to take a hit of almost £60bn over the coming five years as a result of the vote to leave the European Union.
The Office for Budget Responsibility (OBR) slashed growth forecasts and predicted higher than previously expected borrowing.
Howard Archer, chief european and UK economist at IHS Global Insight, said: “Businesses will likely be cautious over investment and employment, and their uncertainty is seen heightened when the government triggers Article 50 of the Lisbon Treaty.
“On the positive side, a markedly weaker pound should support UK exports, although we suspect lacklustre growth in the eurozone will limit the upside.”