Economy slows post-Brexit; but not as much as expected

THE economy grew by 0.5% in the three-month period after the EU Referendum, latest figures out today have shown.

While down on the 0.7% growth in Q2 – the final quarter before the Brexit vote – the figure is still higher than many analysts had been predicting.

Predictions had been for a much lower rate of 0.3%, which was expected to take account of the big devaluation in sterling following the referendum.

In its announcement today, the Office for National Statistics said: “The pattern of growth continues to be broadly unaffected following the EU Referendum with a strong performance in the services industries offsetting falls in other industrial groups.”

In Q3, the services sector increased by 0.8%. In contrast, output decreased in the three other main industrial groups; construction (-1.4%), agriculture (-0.7%) and production decreasing by 0.4%, within which manufacturing decreased by 1%.

It is the last set of GDP data before next month’s Autumn Statement, the first for new Chancellor Philip Hammond.

Responding, Paul Faulkner, chief executive, Greater Birmingham Chambers of Commerce said the Government had to do more to address business concerns in the wake of Brexit in order to boost confidence in key sectors such as manufacturing.

He said clarification on the rights of European nationals living and working in the UK should also be high on the agenda.

“Today’s results are further evidence of the strength and robustness of the UK’ s economy,” said Mr Faulkner.

“However, there is no denying that this quarter’s growth was driven by the services sector. We still have a way to go on rebalancing the economy and growing the UK’s manufacturing sector.

“Businesses are still facing uncertainty in light of the Brexit vote. I would urge the Government to do more to address businesses concerns in the run up to the activation of Article 50 and during negotiations.”

He said in the short term, the business community needed confirmation that European nationals already living in the UK and employed by many firms would be given long term residence rights.

“Next month’s Autumn Statement will provide a massive opportunity for the Chancellor to demonstrate the Government’s commitment to growing the economy and building investor confidence,” he added.

“We hope to see investment in vital infrastructure and pro-enterprise measures at its core.

“The Government was full of praise and positivity for Birmingham, the West Midlands and the Midlands Engine during their party conference. The Autumn Statement will be the time for them to turn these words into action and demonstrate their commitment to regional economic growth.”

Louise Bennett, the chief executive of the Coventry and Warwickshire Chamber of Commerce, said the slight fall in growth reflected what companies in the region have been saying.

She said: “Businesses told us in our last Quarterly Economic Survey that they weren’t quite as confident as they were before the vote – but that confidence hasn’t dropped off a cliff, it’s just been dampened.

“Compared to many forecasts, growth of 0.5 per cent will be seen as something of a positive result but there are lots of factors to consider within that – including the fact that Brexit hasn’t actually happened yet so companies, in the main, are taking a business as usual approach.

“Once we know the full details of what leaving the EU looks like, we might get a clearer picture of what the economic effect will be.”
 

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