Britain’s economy has picked up pace since the turn of the year as a weak pound boosts manufacturing and exports, figures show.
The National Institute of Economic and Social Research said yesterday that the economy grew by 0.7 per cent in the three months to January.
That is faster than the 0.6 per cent growth seen in the final three months of last year and shows the economy is strengthening rather than slowing following the vote to leave the EU.
Analysts said a surge in industrial production, manufacturing, exports and construction in December suggested the economy finished 2016 in better shape than initially thought.
The FTSE 250 – often seen as a better barometer of the economy than the FTSE 100 as many of its firms are British rather than global – rose 0.5 per cent to 18,715.36, a record high.
The FTSE 100 index of blue chip stock was up 0.4 per cent to 7258.75 – leaving it just shy of last month’s best ever close of 7337.81. The London stock market has gained 22 per cent since its low in the immediate aftermath of the Brexit vote – adding £397billion to the value of Britain’s leading 350 companies.
The latest share price rally came as a deluge of figures from the Office for National Statistics showed:
– Britain exported more to the rest of the world than to the EU for a fifth year in a row in 2016;
– Industrial production was 4.3 per cent higher in December than in that month the previous year – the best performance since January 2011;
– Manufacturing output jumped 4 per cent year-on-year – its strongest increase since April 2014;
– Construction output increased by 1.8 per cent between November and December with growth driven by the building of houses and commercial property such as offices.
Martin Beck, economic advisor to the Ernst & Young Item Club, said the figures ‘exceeded even the strongest estimates’. Alan Clarke, an economist at Scotiabank, said the figures could force the ONS to revise growth for the fourth quarter of 2016 from 0.6 per cent to 0.7 per cent.
Analysts at Capital Economics said growth in the manufacturing sector could outstrip growth in powerhouse services this year for the first time since 2011. The research group’s Scott Bowman said: ‘Growth is becoming more balanced. The future looks more promising than it has done for some time.’
Howard Archer, chief UK economist at IHS Markit, said: ‘The economy [is] firing on several cylinders, and not just reliant on services and consumer spending.’
John Longworth of Leave Means Leave said export figures show ‘the huge potential Britain has to trade with the world after Brexit and the decreasing relevance of the EU’.
February 2017: Daily Mail