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Brexit: GDP growth stalls fuelling fears of UK recession

Sluggish GDP growth is fuelling fears that the UK could still be heading for a recession after figures have shown that in the last quarter the economy grew at just half the rate seen before the EU referendum.

According to the National Institute of Economic and Social Research (NIESR), GDP grew at a rate of 0.3% in the three months up to August which is half the 0.6% expansion the economy experienced in the run up to Brexit.

The stalling growth rate is fuelling fears that the economy could slip into recession following the referendum, and the NIESR believe that the probability of a technical recession ‘remains significantly elevated’ heading in to 2017.

Rebecca Piggott, Research Fellow at NIESR, commented: “The evidence on the current state of the economy post-referendum is limited, but on balance these data suggest that the UK economy is in the midst of a slowdown.”

The figures come after disappointing manufacturing numbers yesterday which posted a 0.9% decline in manufacturing output in July, as industrial production fell on the previous month to mark the biggest decline in a year.

Property market boost

Despite the current gloom enveloping the economy, there were some positive figures released today as the Royal Institute of Chartered Surveyors (Rics) said that the housing market was settling down after the jolt it received in June.

After a dramatic decline in property sales immediately following the referendum, these have now stablised according to the firm, which also said its members predict that house prices are on course for a 3.3% rise year-on-year for the next five years.

Simon Rubinsohn, chief economist at Rics commented: “There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum.

“Buyer enquiries did dip again in August but only modestly, and more significantly, sales expectations are beginning to edge upwards once again.

“It is likely the swift response from the Bank of England has played a role in helping to support confidence.”

However, it is not all entirely positive news on the property front as, despite the market steadying itself in August, property in London and the West Midlands continued to see falls in property values, while the prediction of a 3.3% rise is slightly less than the group’s prediction of 4% at the beginning of the year.