GDP growth in Q2 likely to represent a last hurrah for the UK economy - EY ITEM Club comments
27 July 2016
- GDP growth in Q2 comes in a strong 0.6%…
- …but largely due to an exceptional April performance
- Q2 may represent a last hurrah before Brexit slowdown emerges
Martin Beck, senior economic advisor to the EY ITEM Club, comments:
“The preliminary estimate for GDP growth in Q2 2016 took the year-on-year growth rate to 2.2%, the best outturn for four quarters. The strong Q2 reading was driven by the production sector, which enjoyed a quarterly increase of 2.1%, while services growth slowed a little compared with Q1.
“The monthly figures point to a significant loss of momentum through the quarter which means that the launchpad for Q3 was already soft, even before we factor in any Brexit effects. The strong Q2 reading was almost entirely due to the exceptional April performance across the three main sectors.
“GDP growth in Q2 looks likely to represent one last hurrah for the economy before it enters a softer and more turbulent period. The lack of momentum as the economy entered Q3 means that the chances of a negative reading for the current quarter are relatively high. However, our view remains that the extent to which the economy will slow in the second half of the year has been overplayed and that the UK may avoid a technical recession.”