Wednesday 8 February 2017 2:43 pm

The UK economy is gaining momentum despite Brexit fears, says the OECD

UK economic growth is gaining momentum despite concerns over Britain's future EU trade deal, according to the Organisation for Economic Co-operation and Development (OECD).

The composite leading indicator rose to 99.5, according to the group of richer nations, continuing a clear upward trend from July 2016, the month after the UK's referendum on EU membership.

The leading indicator tries to identify turning points in the economy’s momentum above long-term averages before it shows up in growth figures. A reading of above 100 suggests the economy is growing steadily.

Read more: Another Brexit downgrade for UK GDP growth from OECD

The OECD has predicted growth in the UK will fall steeply over the course of this year as the process of Brexit begins. It forecasts GDP growth of 1.2 per cent in 2017, well below the Bank of England, which now expects two per cent annual growth.

The UK economy grew by two per cent in 2016, less than the 2.2 per cent rate recorded in the previous year.

Before the EU referendum the OECD predicted market turmoil if the UK voted to leave the EU. It was vindicated in the short term by market volatility, but in the months since the referendum the only markedly negative economic consequence for the UK has been the devaluation of sterling.

The OECD said: “In the United Kingdom, there are tentative signs of growth gaining momentum, but the CLI remains below trend and uncertainty persists about the nature of the agreement the UK will eventually conclude with the EU.”

Read more: OECD finds UK growth will be stable but slow

The indicator shows stable growth momentum for the 35 OECD countries. Larger Eurozone countries in particular are showing signs of a pick-up in growth momentum, with France and Germany among the best performers relative to the long-term average of the index.

Growth in the US economy is also expected to accelerate in the next year with Donald Trump now confirmed President, along with major emerging economies such as China, Brazil and Russia. However, the OECD expects growth in India to lose momentum.