UK economy grew 0.6% in second quarter despite looming Brexit vote

The UK economy grew during a second quarter that concluded with the 23 June vote to leave the European Union, aided by the biggest uptick in industrial production since 1999, according to official data.

In a scheduled data release on Wednesday (27 July), the Office for National Statistics (ONS) said second-quarter gross domestic product (GDP) rose by 0.6%, up from 0.4% in the first three months of the year.

Market consensus was in favour of growth holding steady at 0.4%. Much of the growth was driven the country's dominant services sector that grew 0.5% and the manufacturing sector which grew 1.8%, boosted by automobile and pharmaceuticals sector.

Commenting on the data Joe Grice, chief economist at the ONS, said: "Any uncertainties in the run-up to the referendum seem to have had a limited effect on the economy." He added that "very few" respondents to the ONS survey cited Brexit uncertainty as having had an impact on their business, he added.

The only caveat, for an otherwise impressive data-set, is that the figures only include seven days worth of post-Brexit vote sentiment.

Ben Brettell, senior economist at Hargreaves Lansdown, said the economy had shaken off pre-referendum nerves in the run-up to the poll. "However, it's always difficult to tell where you're going by looking in the rear-view mirror, and as such the figures can't be taken as evidence of the current climate. What they do show is an absence of pre-Brexit concerns, meaning that if the forecast downturn does materialise, at least we start from a position of relative strength."

To assess what might happen next, Brettell said a look at so-called 'leading indicators', such as survey data, was merited.

"These universally make for pretty grim reading, and point to a likely slowdown and possible recession in the coming months. Consumer confidence fell at its fastest pace in 22 years in the aftermath of the vote, while 30% of business leaders said they were likely to either freeze recruitment or lay workers off. With confidence this low, a recession can become a self-fulfilling prophecy," Brettell concluded.

Updated with analyst quotes and additional data at 9:54am BST on 27 July 2016.