Recession threat recedes as Britain posts solid growth

Bloomberg

The UK economy grew at its fastest pace in six months in July, an unexpectedly strong performance that will allay fears Britain is facing a possible pre-Brexit recession.
The economy recorded growth across the board, with the dominant services sector enjoying its best month
this year. All else being equal, it will expand 0.4 percent in the third quarter even if output is unchanged in August and September, avoiding a second straight quarter of contraction.
However, there is evidence that the economy lost some momentum more recently as the political crisis over Brexit hit confidence and the trade war between the US and China escalated.
In a report on Monday, KPMG warned that leaving the European Union without a deal could trigger a recession lasting four quarters, with output contracting by 1.5 percent next year.
The Resolution Foundation said the next recession could be “unnecessarily painful” because monetary and fiscal policy are ill-equipped to combat it.
Opponents of a no-deal Brexit are battling to stop Prime Minister Boris Johnson taking Britain out of the European Union next month without a transition agreement to cushion the blow.
The turmoil has seen Johnson, who has staked his weeks-old premiership on delivering Brexit on October 31, defeated in parliamentary votes, lose his majority, suffer Cabinet resignations and fail in his bid to hold a general election.
The pound strengthened following Monday’s data, which showed GDP expanded 0.3 percent in July, beating forecasts for a 0.1 percent increase, and was unchanged over the latest three months.
The economy will avoid a recession unless output drops by more than 0.8 percent over August and September.
Construction output rose 0.5 percent between July and June; manufacturing grew 0.3 percent despite a stagnant month for auto output; and total industrial production gained 0.1 percent.