The British economy is holding up in the face of Brexit - for now

BRITAIN’S ECONOMY GREW by a better-than-expected 0.5% in the three months following the country’s vote in favour of exiting the European Union, official data showed today.

Gross domestic product expanded in the third quarter of the year, although slightly weaker compared with growth of 0.7% in the three months to the end of June, when Britain voted in a referendum for Brexit.

However, analysts’ consensus forecast had been for GDP growth of only 0.3% in the third quarter, or three months to the end of September.

The Office for National Statistics added in a statement that output grew by 2.3% in the third quarter 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.

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.”

A dramatically weaker pound, alongside the possibility of re-introduced border controls for Northern Ireland and trade tariffs with the UK have all been identified as major headwinds for businesses in the Republic after the Brexit vote.

Article 50

Prime minister Theresa 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.

May 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% quarter-on-quarter in the third quarter,” noted Howard Archer, chief UK economist at IHS Markit.

“While down from 0.7% 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″.

Additional reporting Peter Bodkin