The conundrum of economic growth continues. The withdrawal process from the EU is, even by the admission of the most ardent Brexiteers, going pretty badly. We have a rearguard Remain lobby trying to talk down the economy at every opportunity – something which you might think ought to be undermining confidence. And yet still there is no sign of the Brexit-induced recession which the Treasury told us a month before the 2016 referendum would be inevitable within two years of a Leave vote.
The GDP figures for the third quarter released by the Office of National Statistics (ONS) this morning, show that the economy grew by 0.6 per cent in the third quarter. It is not dynamite, especially considering that growth was a more modest 0.1 per cent in the first quarter and 0.4 per cent in the second. But still, it is nowhere near a recession. Only a fortnight ago Philip Hammond revised down the forecast for growth in 2018 from 1.5 per cent to 1.3 per cent, blaming cold weather in the spring. Given today’s figures it looks as if he needn’t have bothered with the downgrade – GDP is already up 1.1 per cent in the first three quarters. An unexciting performance in the final three months of the year will see the earlier target hit with ease.
No-one should be boasting about UK growth which remains sluggish by the standards of prior to the 2008/09 crisis. But the last figures do provide inconvenient news for Remainers who have been trying to make out that Brexit is dragging Britain down while the rest of the EU sails ahead. That might be how it seemed briefly at the end of last year when the ECB upped its growth forecast for the Eurozone from 1.8 per cent to 2.3 per cent. That now looks like hubris. In the first three quarters of 2018 the Eurozone economy is up just 1 per cent – a little behind that measured in the UK.
Interestingly, UK growth in the third quarter came mostly from the construction sector, which grew by 2.1 per cent. The largest sector of the economy, services, by contrast, grew by 0.4 per cent. There may be a meteorological element here – a dry summer allowing construction works to catch up after a cold, wet early spring. But then again I wouldn’t put it past a few in the Remain lobby to explain it by claiming the expansion in construction is thanks to the government secretly building lorry parks and nervous citizens digging out secure underground larders in preparation for the chaos and hunger of next March.