Michael Baxter, economics spokesman for The Share Centre said:
“The latest estimate of UK GDP in Q2 of this year from the Office for National Statistics confirms that the UK economy grew by just 0.3% in the quarter. It was not the worst performance in the quarter across the EU, but the UK was the joint slowest growing economy in the EU in the first half – along with Finland.
“Household spending was especially subdued – up 0.1%, while business investment was flat on the quarter before. Trade had a neutral impact.
“The main reason for the slow growth rate relates to the falls in the pound post Brexit, which has led to falls in real wages. Bear in mind that the pound has fallen again since then, following the June election, but the effect of this on inflation and real wages is not likely to be felt until next year.
“The UK needs trade led growth, but at least there is some hope of this happening, the manufacturing purchasing manager’s survey out at the beginning of August pointed to one of the sharpest rises in export sales in the history of the survey. That provides the best hope for the UK.”
Jonathan Chitty, Investment Analyst at Brown Shipley, said: “The second estimate of UK GDP for the quarter to 30 June contained no surprises.
“Whilst it is clear that the Brexit-fuelled catastrophe predicted by some has not yet come to pass, there are signs that UK consumers are being squeezed, with today’s data showing household spending advancing only 0.1% over the quarter.
“The inflation caused primarily by a weaker pound, has led consumer prices to increase more quickly than wages, tightening disposable incomes and causing people to delay big purchases like vehicles.
“When compared to 2016 there has been something of a slowdown in the first half of 2017, and with institutions like the Bank of England and the International Monetary Fund sounding decidedly cautious on the UK’s prospects, a great deal of uncertainty lies ahead for the world’s fifth biggest economy.”
Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management: “The UK’s economy continues to rumble on despite threats of the Brexit bogeyman on the horizon. The small rise in wage growth has been negated by inflation and the effect of sustained price rises is taking a bite out of consumer spending power. Fears of cheap consumer debt fuelling spending is proving to be a thorn in the Bank of England’s side as it tries to navigate the potential need for a rate rise.”
