UK third quarter GDP confirmed at 0.5%

The UK economy grew by 0.5% in the third quarter, official figures have confirmed, helped by export growth and stronger consumer spending.

In its second estimate of the health of the economy, the Office for National Statistics (ONS) also says business investment grew by more than expected.

That was up 0.9% following the Brexit vote, against the second quarter, although it was down on last year.

There will be a third estimate of the figures in December.

“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,” Darren Morgan, an ONS statistician, said.

“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 figures cover the period from July to the end of September and the ONS said the growth in gross domestic product suggested limited effect so far from the EU referendum at the end of June.

Sharp slowdown

However, it is expected that the effects of the Brexit vote and the fall in sterling will begin to feed through in the coming months.

The Office for Budget Responsibility, which provides independent economic forecasts and analysis, said on Wednesday that it expected the economy to grow by 1.4% in 2017, down from the 2.2% it predicted in March. It cut its forecast for growth in 2018 to 1.7%, down from 2.1%.

The “near-term strength of the economy after the Brexit vote is unlikely to persist”, said Samuel Tombs chief UK economist with Pantheon Macroeconomics.

“The outlook for stagnation in real incomes next year, as inflation rockets, points to a sharp slowdown in consumer spending growth ahead,” Mr Tombs added.

Analysis: Jonty Bloom, business correspondent

The British economy continued to grow following the vote to leave the EU and so has business investment, although there had been fears that both would be hit immediately by the decision to leave the EU.

It is the huge services sector that kept the economy growing. Services increased by 0.8%, driven by a continued strong performance on the British High Street as sales continue to boom. But all the others sectors of the economy, manufacturing, agriculture and construction, are contracting.

It is however the business investment figures which are the most encouraging. They show investment is continuing to grow, despite fears that businesses would slam on the brakes following the Brexit vote, if only temporarily, because they were uncertain about what the future holds.

The ONS says business investment held up well after the vote to leave the EU, although it also added that most decisions on investment in this period were probably taken before the referendum result was known.

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