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UK economy on track to dodge pre-Brexit recession but outlook weak

LONDON (Reuters) – Britain’s sluggish economy looks to have dodged recession in the run-up to its deadline for leaving the European Union this month, official data showed on Thursday.

FILE PHOTO: Fruit is displayed for sale inside a supermarket in London, Britain August 7, 2019. REUTERS/Henry Nicholls/File Photo

Gross domestic product in the three months to August was 0.3% higher than in the previous three months, beating all forecasts in a Reuters poll of economists and accelerating from an upwardly revised 0.1% in the three months to July.

However, the stronger performance largely reflected data revisions to earlier months and the most recent figures were weak.

Output in August alone dropped by 0.1% on the month versus economists’ average forecast for it to hold steady, while growth in July was revised up to 0.4%, the Office for National Statistics said.

Sterling edged up against the U.S. dollar GBP= following the stronger-than-expected data.

“The economy has regained some momentum but the underlying trend is towards softer growth. The headwinds from a major global slowdown and uncertainty at home point to weaker growth ahead,” said Ian Stewart, chief economist at accountants Deloitte.

Britain’s economy shrank in the second quarter of the year, driven by a sharp decline in April when businesses found themselves holding unnecessary stockpiles of raw materials after Brexit was delayed from the original date of March 29.

RECESSION RISK DIMINISHES

Prime Minister Boris Johnson has promised to take Britain out of the EU by Oct. 31, without a transition period if necessary – despite parliament telling him to delay Brexit again if he cannot negotiate a fresh deal. Businesses say a no-deal Brexit risks causing major disruption to imports.

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