RTWed, 22 Feb 2017 18:17 UTC
© Neil Hall / Reuters
Britain's economy grew by more than previously reported in the last quarter of 2016, according to official figures - despite Brexit scaremongering.The UK's GDP grew by 0.7 percent in Q4 of last year - up from the 0.6 percent originally estimated by the Office for National Statistics (ONS).
The upward revision is partly due to the manufacturing industry performing better than predicted.
Paul Hollingsworth of Capital Economics claims the bump up can also be explained by an unexpected Christmas shopping boost.
"Upbeat consumer sentiment and continued low interest rates should ensure that household spending doesn't slow too sharply," he told the Telegraph.
Britain's economic resilience since last June's EU referendum has surprised experts, who had predicted that the UK would be in dire straits if it voted to leave the bloc.
The new figures also show that consumer spending increased by 1.2 percent in the final quarter of 2016, while manufacturing grew by 1.2 percent and the services sector posted a gain of 0.8 percent.
However,
critics warn that the boost in consumer spending has been largely financed by credit card debt.The ONS also pointed out that there was a drop in business investment, which fell by one percent in the last quarter.
Bond strategist Shilen Shah of Investec Wealth & Investment said the slowdown was due to a lack of investor confidence.
"Somewhat disappointingly, business investment fell on the quarter, with hints that Brexit uncertainty is hitting business confidence," he said.
Comment: Of course most 'experts' were screaming that Britain would burst into flames on a 'Brexit' vote - it was just more of the same-old propaganda. So, the fact that the world hasn't ended shouldn't shock anyone. Nancy Curtin, Chief Investment Officer at Close Brothers Asset management, has
claimed that it has largely been a weak pound that has helped Britain maintain its current course:
"The improved GDP revision for the final quarter of 2016 confirms that it was business as usual for the UK economy, despite the UK's momentous vote to leave the EU. The lower pound appears to have acted as shock absorber and continues to aid industrial activity and exports. The UK is also in a fortunate position of capitalising on any pick up in global growth given that 70% of its market is international.
The weak pound has helped British corporations who get their earnings abroad. As Financial Times
reports,
Why is the FTSE loving this?
Because many companies in the FTSE 100 and FTSE 250 get their earnings abroad.
The likes of HSBC, GlaxoSmithKline and Wolseley are all seeing nice boosts to their share prices. Even the mid-cap 250 index, which has a more diverse group of companies that better reflects the UK economy, is enjoying sterling's pain, since it is populated by commodities companies. Interest rates are low so the dividend yield from equities is more tempting than yields from other markets. Caution: this is one way of looking at the FTSE.
Another is to measure FTSE companies in dollar terms, and when you do that you see that the FTSE is down over the course of the year. Compared to US companies and other peers, UK companies are underperforming in the long term. Even so, the FTSE may be benefiting from the surprisingly good economic data since Brexit and the neutralisation, thus far, of fears about recession. There is also the prospect of a weaker pound firing M&A activity. "While we expect Brexit fears to bite at some stage, the strength of the FTSE 100 is reflective of the fact that Brexit hasn't had too much of an impact on the UK economy so far," says Kathleen Brooks at City Index.
Comment: Of course most 'experts' were screaming that Britain would burst into flames on a 'Brexit' vote - it was just more of the same-old propaganda. So, the fact that the world hasn't ended shouldn't shock anyone. Nancy Curtin, Chief Investment Officer at Close Brothers Asset management, has claimed that it has largely been a weak pound that has helped Britain maintain its current course: The weak pound has helped British corporations who get their earnings abroad. As Financial Times reports,