UK service firms defy Brexit, while auto industry flays uncertainty
No sign of an immediate shock to the economy, although the full picture will continue to emerge
Britain’s giant services sector grew strongly in July, according to official data giving the clearest sign to date that the economy did not slump immediately into a major slowdown after the country’s vote in June to leave the EU.
The Office for National Statistics (ONS) said output in the services sector grew by 0.4 percent compared with June, better than many economists had anticipated, and was up 2.9 percent in year-on-year terms.
The ONS also said economic growth was stronger than it previously thought in the run-up to the June 23 referendum as consumers and businesses increased their spending, despite the approach of the vote.
“Together this fresh data tends to support the view that there has been no sign of an immediate shock to the economy, although the full picture will continue to emerge,” ONS statistician Darren Morgan said.
The data may dissuade the Bank of England from following through on its plan to cut interest rates again at its next meeting, though the economy still looks set to slow sharply next year when the full impact of the referendum is likely to be felt.
Meanwhile, Britain’s car industry body said on Friday that current uncertainty over Brexit was not conductive to attracting investment and that the government must maintain the competitiveness of the sector.
Nissan said it could scrap a potential new investment in the country’s biggest car plant unless Britain pledged compensation for any tax barriers resulting from its decision to leave the European Union.
When asked about Nissan CEO Carlos Ghosn’s remarks, the head of the Society of Motor Manufacturers and Traders (SMMT), said: “The current uncertainty is not conducive to attracting manufacturing investment to the UK.”
“The government must do all it can to maintain the competitiveness of the UK automotive sector, which has been hugely successful in boosting exports, creating jobs and generating economic growth in recent years,” SMMT CEO Mike Hawes said.