In response to preliminary GDP figures released today, James Sproule, Chief Economist at the Institute of Directors, said:
“Today’s growth figures show greater resilience than many expected. The first full set of post-referendum results has seen service growth underpin GDP growth. Firms continue to adopt a wait-and-see approach concerning investment, so the challenge to the Government in the Autumn Statement will be to bolster the confidence necessary to trigger business spending and investment. While over half of IoD members are optimistic about the UK’s economic prospects, over a third are worried that an economic slowdown would negatively affect their business. The real test of this will be early next year when the currency impact will be more fully felt, feeding through into higher prices and causing inflation to rise towards target levels.
“Manufacturing, which saw a fall in output, could prove a leading indicator of how uncertainty could affect the UK’s economy. Manufacturing firms tend to export more, but also depend upon complex supply chains and imports, so much of the sterling gain has been offset. Future contracts are also likely to be reconsidered in light of uncertainty surrounding the UK’s trading relationship with the EU. The hoped for export boost from the depreciated sterling does not seem to have materialised, at least in these first few months, as manufacturing output fell by largest amount compared to the three months prior since the financial crisis.”