"The adverse consequences of the Brexit vote will become increasingly clear as inflation shoots up and firms postpone investment over the coming quarters".
- Samuel Tombs, Pantheon Macroeconomics
The British economy expanded more than expected in the Q3 despite the Brexit vote, official figures revealed on Thursday. According to the UK Office for National Statistics, the economy grew 0.5% during the July-September period, compared to the preceding quarter's 0.7% growth pace, while market analysts expected the UK's Gross Domestic Product to advance 0.3% in the reported quarter. The Bank of England is now likely to leave its benchmark rate unchanged when it meets next week. After the stronger than expected data release, the British Pound hit its one-week high against the Greenback, trading at $1.2266. Furthermore, British 10-year government bond yields jumped to their highest level since the EU referendum. The Q3 growth was mainly driven by the services industry, which in its turn was helped by the film and television sector as the latest films in the Bourne and Star Trek series were released in July along with other blockbusters. On an annual basis, the economy grew 2.3%, the highest growth rate the UK experienced in more than a year. However, some analysts remain cautious, suggesting that there may be a delayed impact from the vote. Moreover, inflation is projected to rise to around 3% in 2017 amid the weak British Pound.
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