'Spluttering but not stalling’: Britain set to escape recession

THE UK economy remains mired in Brexit turmoil, but the nation should avoid a recession for now, according to the latest figures.

While construction, manufacturing and retail are suffering as businesses hold off on investment and consumers tighten belts, the more powerful services sector is still on the up, just.

Today’s numbers from the Office for National Statistics show the economy grew 0.3% in the past three months.

While GDP slipped 0.1% in August, that probably isn’t bad enough to cause another quarter of negative growth on top of the 0.2% second-quarter decline.

Simon French at Panmure Gordon said: “Economic growth of 1.1% over the last year, and +0.3% over the last three months, shows a UK economy spluttering, but not yet stalling. Part of the recent patchy performance can undoubtedly be attributed to the slowdown in the global economy, but there is also clear evidence that grandstanding in Westminster is damaging the UK’s economic outlook.”

David Cheetham at trading firm XTB said a recession is “highly unlikely”. He added: “The most recent GDP readings from the UK have shown a contraction in month-on-month terms but taking a step back and looking at the bigger picture it doesn’t appear quite so bad.”

The pound was treading water in reaction to the figures, hovering at around $1.22, near five-week lows.

The ONS’s Rob Kent-Smith said: “Growth increased in the latest three months, despite a weak performance across manufacturing, with TV and film production helping to boost services.”

Other concerns include heightened tension between China and the US, which are due to resume trade talks in Washington today. Unless the talks are a success, the US will increase tariffs on $250 billion worth of Chinese goods from 25% to 30% next Tuesday.

City watchers say they need a clear direction of travel before the economy can start to improve.

Phil Smeaton at Sanlam UK said: “At this point even a no-deal Brexit will remove the uncertainty preventing business from doing its job.”