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UK GDP growth figures to show Brexit vote's impact on the economy – business live UK GDP: Economy grew by 0.5% after Brexit vote – business live
(35 minutes later)
10.01am BST
10:01
Economists: Brexit impact will be felt in 2017
Today’s GDP report is an important measure of the health of Britain’s economy after June’s historic referendum.
But several economists say the real test of the Brexit vote will come in 2017, not today.
Here’s PwC’s Andrew Sentance:
UK #GDP was resilient in Q3, led by services. But impact of #Brexit decision on investment still likely to dampen growth next year.
Geoffrey Yu, head of UK Investment Office at UBS Wealth Management, predicts that growth will keep slowing:
Anecdotal evidence supports the view that we’re yet to see any meaningful damage as a result of the Brexit vote, at least in the short-term.
“Of course, we should not overlook the lingering sense of uncertainty. Though the economy has fared better than initially feared, we expect that economic growth will slow down relative to the early part of this year.
Jeremy Cook, chief economist at the international payments company World First, says we’ll have a better picture once Theresa May has triggered article 50:
“We have called the UK consumer a hardy beast in the past and in Q3 the beast was back. The services sector singlehandedly drove growth to a 15th consecutive positive quarter and while the ‘little evidence of a pronounced effect’ from the Brexit vote is being seen yet, we think that it will be as gradually obvious as the year comes to an end. The beast will tire as inflation fires arrows at its increasingly weakening hide.”
Updated
at 10.01am BST
9.57am BST
09:57
Thomas Laskey of Aberdeen Asset Management argues that the Bank of England should get some credit for today’s growth report:
“The data shows that the UK economy fared well in the aftermath of the EU referendum. It confirms what most investors thought: that sentiment bounced back after the initial shock of the result. Growth was fairly strong, at least in part because the Bank of England restarted its bond buying programme and the fact that changes to investment plans take time to play out.
But he predicts slower growth next year:
“The outlooks for growth is pretty uncertain. Brexit has the potential to be extremely costly to the UK and the country could be poorer as a result. We’ve already seen this reflected in sterling’s dramatic drop. Growth will probably slow as import costs increase and people’s incomes fall as inflation rises. We are not out of the woods yet by any means.”
Updated
at 9.58am BST
9.51am BST
09:51
You can see the GDP report online, here:
Gross Domestic Product, preliminary estimate: July to Sept 2016
9.50am BST
09:50
Hammond hails GDP report
Chancellor Philip Hammond says today’s report shows that the UK economy is resilient, and ‘well-placed’ to deal with the challenges and opportunities created by the EU referendum.
We are moving into a period of negotiations with the EU and we are determined to get the very best deal for households and businesses. 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 opportunities ahead.”
Here's my response to today's @ONS GDP figures. pic.twitter.com/GGdt0UCFkr
Updated
at 9.53am BST
9.49am BST
09:49
Anyone remember George Osborne’s plan to rebalance the economy and create a March of the Makers?
Five year’s later, Britain is as dependent on service sector growth as ever:
So much for rebalancing. UK Q3 GDP growth entirely driven by services sector. Everything else (manufacturing, construction etc) shrinking pic.twitter.com/Cnr1D2Rrj6
9.43am BST
09:43
Britain’s economy has now grown for 15 quarters in a row, and is 8.2% higher than the pre-economic downturn peak in early 2008.
9.40am BST
09:40
ONS: Little evidence of Brexit effect
Today’s report shows that Britain has not suffered a Brexit shock, according to Joe Grice, head of the Office for National Statistics.
Grice says:
There is little evidence of a pronounced effect in the immediate aftermath of the vote”
9.39am BST
09:39
The pound has rallied a little, to $1.225, as traders welcome the GDP report.
A small flurry of excitement for the pound GBPUSD on the GDP release but nothing excessive - back to this week's highs: pic.twitter.com/OrR2wc5zst
9.37am BST
09:37
Service sector grows, everything else shrank
Britain’s service sector, which makes up three quarters of the economy, is the only part which grew in the last three months.
Service sector output grew by 0.8% in July-September.
9.34am BST
09:34
At first glance, this report suggests that the UK economy has shrugged off the immediate shock of the EU referendum.
It has grown faster than predicted in the gloomier forecasts ahead of June’s vote. Remember, the Treasury said the economy would shrink by 0.1% after a Brexit vote.
Boom. UK GDP 0.5% q/q in Q3 - bang in line with the post-crisis average. @graemewearden pic.twitter.com/Ah3K78bHaQ
9.32am BST
09:32
On an annual basis, the UK economy grew by 2.3% during the last quarter.
Again, that’s stronger than expected.
UK GDP Q3 (YoY)Actual: 2.3% Survey: 2.1% Prior: 2.1% #gbp
GDP 0.5%.. quite a bit better than many economists expected
9.30am BST
09:30
UK GDP RELEASED
HERE WE GO! Britain’s economy grew by 0.5% in the three months after the Brexit vote.
That’s down from 0.7% in the second quarter of 2016, showing that growth has slowed.
But it’s also stronger than the 0.3% which economists has expected.
More to follow!
9.29am BST9.29am BST
09:2909:29
The pound has risen back to $1.224...The pound has risen back to $1.224...
I guess GDP is going to be decent then..I guess GDP is going to be decent then..
9.26am BST9.26am BST
09:2609:26
Tension is building, with just four minutes until we learn how the UK economy performed after the EU referendum....Tension is building, with just four minutes until we learn how the UK economy performed after the EU referendum....
Stand by your desks! UK GDP is due in a few minutes....Stand by your desks! UK GDP is due in a few minutes....
9.21am BST9.21am BST
09:2109:21
Back in April, the Treasury claimed that the economy would shrink by 0.1% for four quarters in a row, if Britain voted to leave the EU.Back in April, the Treasury claimed that the economy would shrink by 0.1% for four quarters in a row, if Britain voted to leave the EU.
Today’s GDP report is the first test of that assessment....Today’s GDP report is the first test of that assessment....
Q3 GDP forecast by OBR a year ago at +0.7%, at Budget at +0.5%. And in HMT pre EUref impact assessment at -0.1 ... pic.twitter.com/tV8OPlZDttQ3 GDP forecast by OBR a year ago at +0.7%, at Budget at +0.5%. And in HMT pre EUref impact assessment at -0.1 ... pic.twitter.com/tV8OPlZDtt
9.07am BST9.07am BST
09:0709:07
A flash of good news from Madrid: the Spanish unemployment rate hit its lowest level since 2009 in the last quarter. But it’s still 18.9%, despite a surge in summer hiring to handle the tourist trade.A flash of good news from Madrid: the Spanish unemployment rate hit its lowest level since 2009 in the last quarter. But it’s still 18.9%, despite a surge in summer hiring to handle the tourist trade.
9.03am BST
09:03
Economist Rupert Seggins has tweeted a nice graph, showing how uncertainty spiked after the referendum,but has been dropping to less jittery levels since.
UK GDP expected at 9:30 today. Less a test of Brexit & more a test of immediate resilience to economic policy uncertainty. Should be fun! pic.twitter.com/x9tZFghpRG
8.55am BST
08:55
Today’s Q3 growth report is only ‘preliminary’, as it’s mainly based on data from July and August.
That makes it harder to predict, says Jeremy Cook of World First:
Surveys are suggesting a number between 0.1% and 0.4% with consensus estimates looking for a figure of around 0.3% but this is the muddiest figure we will have seen in a while given the collapse in expectations in July and the rebound in August.
Manufacturing may be optimistic but services are not sharing in that joy.
8.51am BST
08:51
The pound has dropped by almost half a cent this morning, to $1.2202, as traders await the UK GDP report.
8.46am BST
08:46
Just 45 minutes until we get the UK GDP report for the last quarter!
Bloomberg’s Maxime Sbaihi predicts it will get a mixed reception:
Expecting 2 reactions to today's 1st post-#Brexit GDP in the UK:We're still growing, we're doing great!It's starting, we're slowing down!
8.36am BST
08:36
Although the City consensus is that UK growth fell to 0.3% in the last quarter, some forecasts are plumping for a rosier +0.4%.
Ross Finley of Reuters has the details:
Potential upside for UK Q3 GDP? Top 5 most accurate forecasters say 0.4% qq, above 0.3% @ReutersPolls median. SmartEstimate also tilts up pic.twitter.com/dU4MeTvujo
8.27am BST
08:27
HSBC are in the camp predicting that UK growth dipped to 0.3% in the last three months.
But they aren’t ruling out a higher figure, saying:
“The U.K. economy has held up in Q3, defying expectations of a pronounced uncertainty-driven slowdown following the referendum.
Given fairly robust indicators, our forecast is for growth of 0.3% qoq, with risks to the upside.”
8.21am BST
08:21
Lagarde: Brexit uncertainty is damaging
Christine Lagarde, the head of the International Monetary Fund, has warned that the uncertainty over Brexit is bad for the economy.
Speaking on Bloomberg, Lagarde says firms want to know whether London-based banks will lose their rights to ‘passport’ services across the EU single market.
Britain’s future trade deals are another question mark, making it harder for companies to invest and create jobs.
This uncertainty is “not healthy”, says Lagarde.
But she does welcome the government’s commitment to trigger article 50 by the end of March 2017.
One thing we know now is the timetable.
So for the next two and a half years nothing changes, but everything is changed.
IMF @Lagarde says Brexit uncertainty damaging. Worrying about banks affect by any loss of passporting
8.03am BST
08:03
Don’t get too excited if today’s GDP report shows that the economy is still growing, says Kathleen Brooks, research director at City Index.
She predicts that consumer spending will provide the bulk of the growth in the last quarter, as industry and construction struggles over the summer
Industrial production has fallen sharply in recent months; it fell by 0.4% in August. Construction is facing a steeper decline, the latest Office for National Statistics data on construction output has fallen 2% since June.
In contrast, the service sector PMI bounced back after a sharp decline in service sector sentiment in July. We expect this pattern to be repeated in the Q3 GDP report.
And Brooks also fears that 2017 will be tough, as higher inflation eats into real wages.
The Bank of England has slashed its growth forecasts for 2017 to a mere 0.8%, compared with 2.2% for 2016. Consultancy firm PWC is forecasting a gloomier outcome at 0.6% for 2017.
The biggest risk for UK growth is a sharp slowdown in business investment that could become more pronounced in the coming months, once the UK government has triggered Article 50. If the UK looks set to lose its access to the single market, then we may see the consumer show signs of stress, which could knock the UK economy seriously off course, and potentially plunge us into recession.
7.49am BST
07:49
Today’s GDP figures are the most eagerly awaited since the British economy returned to growth four years ago.
Eric Lascelles, chief economist at RBC Global Asset Management, says.
“This is an extremely high stakes report – the British economy appears to have been surprisingly resilient to the Brexit upset.
“To be clear, some economic damage is still expected, if not of a recession-inducing magnitude.”
That’s via Bloomberg, who reckon the report will “swing the mood of consumers and provide a tool for politicians pushing their view on how tough to be when it comes to actually removing the U.K. from the EU”.
7.39am BST
07:39
Introduction: WELCOME TO GDP DAY
Good morning.
We’re about to find out how well, or badly, Britain’s economy fared in the immediate aftermath of June’s historic vote to quit the European Union.
At 9.30am, the Office for National Statistics will whip the official growth figures for the third quarter of this year out of its hat.
And we’re expecting to learn that the economy slowed sharply in the July to September quarter. But, GDP probably didn’t go into reverse, despite fears that a Brexit vote would trigger an immediate recession.
Economists predict that the quarterly growth rate probably slowed to around 0.3%, or perhaps 0.4%, down from a healthier 0.7% in the April-June quarter.
That would mean that Britain’s economy has been growing for 15th consecutive quarters.
The breakdown of the GDP report will also show how the service sector, manufacturers and construction firms all fared during the last quarter.
The figures are likely to shift the pound, and move the stock markets, especially if growth is markedly stronger or weaker than the City expects.
Morning all, UK GDP expected to show the economy made it through Q3/Brexaggeddon w/o collapsing. FTSE called lower after weak Asia pic.twitter.com/HlZMeIsZ2j
Other data released since June has suggested that the economy has taken the uncertainty pretty well, with the unemployment rate sticking at 4.9% and consumer spending resilient.
As RBC Capital Markets put it:
It does seem that the impact of the referendum won’t have been as immediate as we and many others had initially expected.
But, the true impact of Brexit will be seen over years, of course, not months, as Robin Bew of the Economist Intelligence Unit tweets:
Will be lots of debate over #UK GDP data today, but beside the point. #Brexit effect is a gradual erosion over decades, not a point in time
GDP is obviously the main event. But we’ll also keep an eye on financial results from Barclays and Deutsche Bank, plus cider maker C&C, retailer Debenhams and telecoms group BT.