FX.co ★ UK Q3 GDP growth exceeds forecasts

Britain’s economy grew at a faster-than-expected pace in the third quarter, thus showing no signs of slowing down after the Brexit vote. However, the country’s current account deficit widened to record levels.

According to the Office for National Statistics, Britain’s GDP growth in the third quarter rose by 0.6%, revised up from 0.5% initially. But the first and the second quarters were revised down by 0.1% to 0.3% and 0.6%, respectively.

Despite the fact that Britain’s economy did not suffer from the decision to quit the EU as most economists had expected, a sharp fall in the British pound did not contribute to the growth of the British exports.

This means that the economy grew on the back of domestic demand. According to ONS representative Darren Morgan, robust consumer demand continued to help the UK economy grow steadily in the third quarter of 2016.

Meanwhile, Britain's current account deficit widened to 25.494 billion pounds in the second quarter.

According to economists, a surge in inflation caused by the EU referendum would reduce household spending, so a slowdown in investments in the British corporate sector should be expected.

In this regard, the UK economy still could be vulnerable in case foreign investors get nervous, especially if Britain leaves the EU on the basis of a 'worst-case' scenario.