Britain’s economy won a double boost Thursday on news of faster-than-expected growth following its vote for Brexit and a pledge by Nissan to build new car models in the UK. Gross domestic product expanded by 0.5 percent in the third quarter, official data showed. Although a slight slowdown compared with growth of 0.7 percent in the three months to the end of June, when Britain voted in a referendum in favour of exiting the European Union, it beat analysts’ consensus forecast for GDP growth of 0.3 percent.
Also Thursday, Japanese car giant Nissan said it would build its new Qashqai sport utility vehicle at its plant in Sunderland, northeast England, easing concerns about Brexit’s impact on the industry. “This vote of confidence shows Britain is open for business and that we remain an outward-looking, world-leading nation,” said Prime Minister Theresa May.
Finance minister Philip Hammond said the GDP data pointed to a “resilient” UK economy. “The economy will need to adjust to a new relationship with the EU, but we are well-placed to deal with the challenges and take advantage of the opportunities ahead,” he added. The Office for National Statistics added in a statement that GDP grew by 2.3 percent in the third quarter — or three months to the end of September — compared with one year earlier. “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,” the ONS said.
– Article 50 –
Sterling, which has plunged to multi-year lows against the dollar and euro since the Brexit outcome, experienced a brief rally on the latest data. “The doomsday scenarios predicted about the impact of a Brexit vote on the UK economy seem wide off the mark, given this better-than-expected reading,” said Jake Trask, currency analyst at UKForex. “That said, the UK economy still faces myriad obstacles in the coming months as we head towards the triggering of Article 50 in the New Year.”
May intends to trigger Article 50, which sets a two-year clock ticking on Britain’s departure from the EU, between the New Year and the end of March. The prime minister on Monday denied that Britain was heading for a “hard Brexit” and insisted her hopes for immigration control were not incompatible with a good trade deal with the EU. EU leaders have insisted that access to Europe’s single market is dependent on the freedom of movement, something that May has promised to end after the issue of immigration dominated the EU referendum debate. Businesses are pressing for continued access to the single market of 500 million people, warning that leaving it would result in the imposition of debilitating tariffs. “GDP growth held up well at 0.5 percent quarter-on-quarter in the third quarter,” noted Howard Archer, chief UK economist at IHS Markit.
“While down from 0.7 percent quarter-on-quarter growth in the second quarter, this can still be considered a highly resilient, solid performance in the aftermath of June’s Brexit vote.” But he added that the economy was expected “to suffer in 2017 as the uncertainties facing businesses and consumers are magnified by the triggering of Article 50”.