UK economy picks up but slowdown looms before Brexit

LONDON (AFP) - Britain’s economy has grown at the fastest pace in nearly two years as strong exports and solid household spending offset slumping business investment, data showed yesterday awaiting a Brexit deal.

Gross domestic product climbed by 0.6 percent in the third quarter, in line with analysts’ expectations and up on growth of 0.4 percent in the second quarter, the Office for National Statistics (ONS) said in an initial estimate.

At 0.6 percent growth for July-September, GDP was the strongest reading since the fourth quarter of 2016.

Analyst meanwhile expect the economy to cool ahead of Britain’s departure from the European Union in March, starting with the current fourth quarter. “It seems unlikely that the economy will be able to keep up this pace with Brexit uncertainty hanging over it,” noted Thomas Pugh, UK economist at Capital Economics research group.

The ONS said the third quarter growth was driven by an expansion of 0.3 percent in July, 

“which stemmed from strong retail sales boosted by warm weather and the World Cup, as well as a low base reflecting the weaker start to the year”.  It added: “The recent subdued business investment environment is consistent with external surveys of investment intentions, which attribute much of the weakness to Brexit-related economic and political uncertainty.”

Business investment slid 1.2 percent in the third quarter, while exports jumped 2.7 percent and household spending increased 0.5 percent.

“The export growth... reflects an increase in both goods and services exports, with goods exports to non-EU countries growing more robustly than to the EU,” the ONS noted.

Britain could be about to finally seal an all-important deal to smooth its departure from the European Union, although reports this week of an imminent announcement have cooled somewhat heading into the weekend.