UK economy to dodge pre-Brexit recession but outlook weak

LONDON (Reuters) – Britain’s economy looks to have dodged recession in the run-up to its deadline for leaving the European Union this month but the pace of growth has sagged as exporters felt the impact of the slowing world economy, official data showed on Thursday.

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.

But the stronger performance largely reflected 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, the Office for National Statistics said.

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

The world’s fifth-biggest economy shrank in the second quarter, 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.

The Bank of England predicted last month that Britain’s economy would grow by 0.2% in the third quarter, bolstered in part by higher public spending.

BoE Governor Mark Carney said the underlying rate of growth was even weaker and Thursday’s data “is consistent with that picture”.

Investec economist George Brown said Britain was set to avoid a recession. “But at the same time it is apparent that growth is fragile amid the uncertainty surrounding Brexit and the global economic backdrop,” he said.

FILE PHOTO: British port police patrol as the largest container ship in world, CSCL Globe, docks during its maiden voyage,

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