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UK economy grew by 0.6% before Brexit vote

Credit: PA

The UK economy grew by 0.6% during the second quarter of 2016, official figures show.

It follows growth of 0.4% in the first quarter, the Office for National Statistics said.

The expansion in the run up to the EU referendum was driven by industrial production (2.1%) and services (0.5%), but held back by a contraction in construction (0.4%) and agriculture (1%).

The rise in GDP from April to June came in above economists' expectations of 0.5%.

GDP was estimated to have been 7.7% higher in the second quarter than the pre-economic downturn peak of the first quarter of 2008.

Speaking to ITV News, Chancellor Philip Hammond said the latest figures show the British economy is "fundamentally strong".

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Home builders call for action as Brexit affects markets

Since Britain voted to leave the EU, share prices of some of the country's biggest house builders have slumped.

Home builders want the government to expand the Help to Buy scheme in order to strengthen confidence if the economy slows.

Most economists believe a recession is on the horizon. However, some experts disagree, and insist that the much-talked about fall in house prices post-referendum is not entirely inevitable.

ITV News Business Editor Joel Hills reports:

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IFS: 'Hit to economy is real and serious after Brexit vote'

The hit to the economy is "real and serious" following the Brexit vote, the director of the Institute for Fiscal Studies warned.

Paul Johnson told ITV News: "The economy will be hit - and it will be hit quite hard. There is complete unanimity about that among economists, the governor of the Bank of England, the Chancellor.

"We shouldn't pretend that there isn't something real and serious going to happen, because there is."

George Osborne has abandoned his plan to balance the books by 2020 - which Mr Johnson said would only have had a 50/50 chance of success anyway.

Chancellor abandons plan to balance books by 2020

Chancellor George Osborne has abandoned his plan to balance the UK's books by 2020 because of the economic impact of the country's decision to leave the European Union.

ITV News business editor Joel Hills reports:

In a speech to business leaders in Manchester Mr Osborne said: "We must be realistic about achieving a surplus by the end of the decade."

He added that the UK "needs to reduce uncertainty by moving as quickly as possible to forming a new relationship with the EU".

As the Bank of England said yesterday, the referendum result is as expected likely to lead to a significant negative shock for the British economy. How we respond will determine the impact on people's jobs and on economic growth.

The Bank of England can support demand, the Government must provide fiscal credibility so we will continue to be tough on the deficit but we must be realistic about achieving a surplus by the end of this decade and we need to reduce uncertainty by moving as quickly as possible to a new relationship with Europe and being super competitive...

The government must provide fiscal credibility, so we will continue to be tough on the deficit but we must be realistic about achieving a surplus by the end of this decade. This is precisely the flexibility that our rules provide for.

– Chancellor George Osborne
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