Investing.com - The rate of economic growth in the U.K. picked up in the last three months, as the approach of Brexit, one of the factors behind a broader global slowdown, took an increasing toll on investment and consumer confidence at home.
Gross domestic product grew 0.5% in the three months to January, the Office for National Statistics reported on Tuesday, expanding from the 0.4% expansion seen in the three months to December and above forecasts.
“Across the latest three months, growth remained weak with falls in manufacture of metal products, cars and construction repair work all dampening economic growth. These were offset by strong performances in wholesale, IT and health services,” ", Rob Kent-Smith, head of national accounts at the ONS, said.
“This sluggish growth came despite the economy bouncing back from a weak December,” he added.
In a separate report, manufacturing production rose 0.8% in January, while industrial production increased 0.6%.
With just over two weeks until the U.K. is set to leave the European Union, British Prime Minister Theresa May is still struggling to get Parliament to approve her withdrawal agreement. Parliament is expected to vote on the measure later in day.
In talks with EU Commission President Jean-Claude Juncker Monday, May had secured a number of changes and additions to the withdrawal agreement, hoping to persuade dissenting lawmakers that it won’t leave the U.K. permanently trapped in a customs union with the EU with no influence over its rules.
It’s not clear yet whether the changes will be enough to get the deal through parliament. The original version was defeated by a margin of 230 votes and most dissenting lawmakers have yet to say they will back the new version.
A smooth Brexit – or the cancellation of it altogether - are both widely viewed as positive for the U.K. economy. Either outcome would remove a key constraint on the Bank of England, which has indicated it would like to raise interest rates. Sterling has risen 1.5% against the dollar in the last two days, while the yield on the benchmark 10-year government bond rose by 7 basis points to 1.25% on the back of Monday night’s news.