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UK economy grows 0.5pc after Brexit vote

Press AssociationPress Association 25/11/2016

Britain's economy grew 0.5 per cent in the third quarter, the Office for National Statistics says, adding the number shows a "limited effect so far" from the vote to leave the European Union.

In its second estimate of gross domestic product, ONS figures confirmed the economy escaped a major slowdown in the three months after the Brexit vote thanks to a strong performance from Britain's powerhouse services sector.

ONS figures also show business investment grew in the three months following the Brexit vote, despite fears it would take a major hit in the wake of the referendum.

Business investment rose 0.9 per cent to STG44.2 billion ($A74 billion) in the third quarter, compared with STG43.8 billion in the previous three months.

The rise has been attributed to an increase in building investments.

However, on a year-on-year basis, business investment dropped 1.6 per cent from STG44.9 billion to STG44.2 billion, marking the third consecutive annual decline.

Darren Morgan, head of GDP at the ONS, said: "Investment by businesses held up well in the immediate aftermath of the EU referendum, though it's likely most of those investment decisions were taken before polling day.

"That, coupled with growing consumer spending fuelled by rising household income, and a strong performance in the dominant service industries, kept the economy expanding broadly in line with its historic average."

The news comes days after it was revealed the British economy is set to take a hit of almost STG60 billion over the next five years as a result of the vote to leave the EU.

The Office for Budget Responsibility slashed growth forecasts and predicted higher than previously expected borrowing.

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