U.K. GDP Boosted by Household Spending Ahead of Brexit Vote --Update
August 26 2016 - 9:22AM
Dow Jones News
By Wiktor Szary and Nicholas Winning
LONDON--Strong growth in household spending helped boost the
British economy in the run up to the U.K.'s referendum on continued
European Union membership, while business investment fell slightly
year-over-year.
During the second quarter, the U.K.'s gross domestic product
grew 2.2% from the year-earlier period, the Office for National
Statistics said Friday, confirming an earlier preliminary estimate.
On an annualized basis, the U.K. economy grew 2.4%, the ONS said.
It said the growth's momentum came mostly from record-strong
household spending, which increased at the fastest rate in eight
years.
Friday's figures also provided insight into business investment,
which decreased by 0.8% in the April-June period compared with the
same period a year earlier, though it rose 0.5% from the first
quarter.
While the ONS said that there was currently "very little"
anecdotal evidence that the June 23 referendum had any impact on
the pace of economic growth in the second quarter of this year, the
data highlighted the resilience of consumers, and the somewhat more
cautious approach taken by businesses in the immediate run-up to
the vote.
This appears to be in line with other early signs. While July's
GfK survey showed that consumer confidence took a dive in the
immediate aftermath of the U.K.'s decision to quit the EU,
suffering the steepest fall in more than two decades, official
retail sales data for the month showed a strong increase, boosted
by warm weather and the weakened pound.
However, the picture of the business climate emerging from the
first pieces of post-referendum data appears gloomier.
The closely watched survey of purchasing managers at
manufacturers and service providers fell sharply in July, reaching
its lowest level since early 2009, when the global economy was in
the throes of a steep downturn following the onset of the financial
crisis. And, the Bank of England's network of regional agents
reported that while firms weren't planning any big changes to their
hiring and investment plans for the moment, there was a marked
increase in perceptions of uncertainty among businesses.
The ONS is scheduled to release its preliminary estimate of U.K.
economic growth for the third quarter in late October.
Write to Nicholas Winning at nick.winning@wsj.com
(END) Dow Jones Newswires
August 26, 2016 09:07 ET (13:07 GMT)
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