UK economy grew by 0.6% before referendum vote leading to speculation a post-Brexit recession may be avoided

ECONOMISTS say Britain may avoid a post-Brexit recession as figures released today reveal the economy grew faster than predicted before the referendum vote.

Uncertainty about what would happen if Britain voted to leave the EU was expected to slow economic growth in the run-up to polling day.

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But instead figures from the Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.6% in its initial estimate for the second quarter, up from 0.4% in the first quarter of 2016.

This higher-than-expected figure was partly due to the strongest performance from industrial production since 1999.

In this sector there was a rise of 2.1%, compared with 0.2% fall in the quarter before.

Britain's services sector accounts for more than 78% of the UK economy and in the second quarter of this year it grew by 0.5%, edging down from 0.6% in the first three months of the year.

But economic growth was hampered by construction and agriculture, which fell 0.4% and 1% respectively over the period.

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ONS chief economist Joe Grice said uncertainty in the weeks leading up to the referendum had "limited effect" on the economy, with only a small number of companies surveyed by the organisation saying it had negatively impacted their business.

He added: "Continued strong growth across services, particularly in retailing, reinforced by healthy growth in the manufacture of cars and pharmaceuticals, boosted output in the second quarter."

The rise in GDP came in above economists' expectations of 0.5% growth, with many tipping the economy to maintain momentum ahead of Britain's vote on the European Union.

Chancellor Philip Hammond said the GDP figures showed the fundamentals of the UK economy were strong.

He added: "We saw the strongest quarterly rise in production for nearly 20 years, so it is clear we enter our negotiations to leave the EU from a position of economic strength."

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Economists are split about whether Britain could be heading towards another recession.

Martin Beck, senior economic adviser at think-tank EY ITEM Club, said the second quarter GDP growth represented "one last hurrah for the economy" before it is hit by a bout of turbulence.

He said: "The lack of momentum as the economy entered the third quarter means that the chances of a negative reading for the current quarter are relatively high.

But he said the UK might avoid a technical recession, adding: "Our view remains that the extent to which the economy will slow in the second half of the year has been overplayed and that the UK may avoid a technical recession."

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In a poll for 60 per cent of the economists asked thought there would be a recession in the coming year.

However if there is a recession some economists say it might not be as bad as they had originally thought.

Peter Dixon at Commerzbank said: "There is a good chance that we will see two consecutive quarters of negative growth.

"That said, any recession is likely to be very shallow."

The Bank of England will review interest rates when its monetary policy committee meets next Thursday.

It is widely expected to cut the rate from 0.5% to 0.25% to help the economy.