Wednesday 27 July 2016 10:12 am

Brexit fears? Pah: GDP growth in the second quarter just beat expectations

The pound briefly rose against the dollar in early trading, after figures from the Office for National Statistics (ONS) showed the UK's economy grew 0.6 per cent in the second quarter, beating expectations.

Sterling edged up to $1.3134, from a session low of $1.3106, after growth rose above the 0.5 per cent economists had expected for the period between April and June. The figure was also up from last quarter's 0.4 per cent. 

However, the pound later fell to $1.3102, as the analysts worried about the impact of Brexit on growth.

Still – growth was driven by a strong performance in the services sector – "particularly in retailing, reinforced by healthy growth in the manufacture of cars and pharmaceuticals", said ONS chief economist Joe Grice.


“Any uncertainties in the run-up to the referendum seem to have had a limited effect. Very few respondents to ONS surveys cited such uncertainties as negatively impacting their businesses.”

But analysts cautioned that the figure only took into account a short period after the Brexit vote. 

“The figures indicate that the British economy was ticking along nicely in the rose-tinted pre-Brexit world, on track to hit its yearly two percent inflation target," said Dennis de Jong, managing director at

“However… the second quarter numbers released today only includes a week of data following the historic vote to leave the EU, and much has changed since."

However, Ben Bretell, senior economist at Hargreaves Lansdown, took a more optimistic view. 

"It’s always difficult to tell where you’re going by looking in the rear-view mirror, and as such today’s GDP figures can’t be taken as evidence of the current climate," added said  However, what they do show is an absence of pre-Brexit concerns, meaning that if the forecast downturn does materialise, at least we start from a position of relative strength." 

"With confidence this low, a recession can become a self-fulfilling prophecy. Yet there are also tentative signs things might not turn out as bad as the doom-mongers predicted before the vote."