IT’S bad, but not nearly as catastrophic as it could have been, was the qualified response to the latest economic output figures released yesterday morning.
In what was the first official assessment of growth since the referendum, gross domestic product – GDP – rose by 0.5 per cent between July and September, which is lower than the 0.7 per cent recorded in April-June but much more than expected.
The services sector provided all the expansion with growth of 0.8 per cent. Worryingly, agriculture, manufacturing and construction all shrank.
Who were the saviours of the economy? Seemingly it was Star Trek fans. According to the Office of National Statistics, had it not been for higher output in film, music and TV sectors, as well as healthy summer box-office receipts, growth would have been 0.37 per cent instead of 0.5 per cent.
Strong receipts from transport, storage and communication saw the sector grow at its fastest pace since the fourth quarter of 2009.
Philip Hammond said the data showed the resilience of Britain’s economy: “They are very strong figures which show that not only was the economy stronger than we thought going into the referendum but it has been much more resilient than many people predicted following the referendum.”
Leave campaigners were quick to point out that the expectation-defying growth was proof the dire financial warnings of the referendum campaign were over-egged.
Ukip MP Douglas Carswell tweeted: “George Osborne claimed UK GDP would be 6.2 per cent lower in 2030 if we Brexit. He couldn’t even forecast what it’d be next year.”
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In the Commons, former SNP leader Alex Salmond attacked Osborne for “presenting the case against leaving the European Union as a short-term apocalyptic, emergency-budgeted disaster, as opposed to concentrating on the medium-term damage that will certainly be done to this country through withdrawal from the European single marketplace.”
Kallum Pickering, senior UK economist at Berenberg, was cautious in his reading of the data: “The good quarter of growth merely reflects the momentum heading into the vote and the healthy underlying fundamentals after some three years of good growth. The data does not alter our long-term view that Brexit will lower UK trend growth, to around 1.8 per cent from 2.2 per cent per year, via less trade, migration and investment with its major market, the EU.”
In another boost, Nissan announced plans to build the next Qashqai and X-Trail models at its Sunderland factory. The move guarantees 7,000 jobs.
There were, however, questions, over what the government offered Nissan to make them stay here rather than move to France. Ministers are refusing to give details.
Other car manufacturers are now seeking guarantees for their own operations.
John McDonnell, Labour’s shadow chancellor, called it a “chaotic” strategy.
“We know nothing about it,” he said. “Are they literally going to decide factory by factory which one gets support? We have to have a comprehensive plan, and this is chaos at the moment.
“We are trying to get a consensus and heal the divisions the referendum brought and we cannot do that with secret deals behind closed doors. It will divide our country once more.”
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