The UK’s Brexit vote and the accompanying fallout does not seem to have had the detrimental effect some had predicted. The UK’s Office of National Statistics released preliminary GDP figures this week indicating GDP grew at 0.5% over the September quarter, better than the 0.3% expected but lower than the 0.7% recorded in the June quarter. On a yearly basis, GDP expanded by 2.3%, up on June’s comparable figure of 2.1%. The figures, being preliminary in nature, are likely to be revised over the next month under the ONS system of preparing and releasing preliminary, second estimate and final figures for various economic estimates.
ANZ said, “The data snuffed out any chance of a cut at the BoE meeting next week.” UK bond yields rose on the day with the 10 year rate rising by 10bps. Such a large move on the day was not just the result of the GDP figures; European yields in general rose substantially but the UK figures were thought to be a significant part of the cause. NAB economist Tapas Strickland said the UK economy had “shrugged off the Brexit cloud” but he said NAB’s European staff pointed out how the GDP figures showed “an unbalanced economy with declines in Industrial Production and Construction” which would continue as the Brexit process was implemented.