British companies brushed off the uncertainty over Brexit in the three months after June's referendum and increased their investment, helping to drive solid growth in the economy, official data showed on Friday. Business investment expanded at a quarterly rate of 0.9 percent in the three months to September, the Office for National Statistics said, beating expectations for a 0.6 percent rise in a Reuters poll of economists.
Britain's economy overall grew by 0.5 percent in the third quarter, the ONS said, helped by a rebound in exports and robust household spending, the ONS said. A separate survey showed retail sales growing at the fastest pace in more than a year this month and suggested strong consumer spending will continue to drive the economy in the fourth quarter.
Britain's economy has performed much better than most economists had expected in the immediate aftermath of June's vote to leave the European Union. But a much bigger test awaits next year. Rising inflation caused by the pound's post-referendum plunge looks set to squeeze household spending and economists said they still expected business investment to slow.
"So far, so good, then," HSBC economist Elizabeth Martins said. "But we find it hard to believe that the economy can sustain this pace of expansion, given the indications from business surveys and growing price pressures." Britain's business investment statistics are prone to big revisions and the ONS said most of the investment decisions captured in Friday's data probably took place before the Brexit referendum.
While tech giants Facebook and Google and carmaker Nissan have committed to investing in Britain since the vote, some business surveys suggest the scores of smaller firms have curbed plans for capital spending recently. In a move aimed at offsetting the likely slowing of private investment in the next couple of years, finance minister Philip Hammond this week announced he will borrow 23 billion pounds ($29 billion) to invest more in housing, transport and digital infrastructure over the next five years.
The strong retail sales figures from the Confederation of British Industry on Friday chimed with the official data showing households increased their spending by 0.7 percent in the third quarter, slowing slightly but still helping to drive the economy in the face of uncertainty around Brexit.
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