UK consumers stepped up their spending in the second quarter and businesses increased investment as the economy showed few signs of reticence before the Brexit referendum in June.

Household spending rose 0.9 per cent from the first quarter, the fastest pace in almost two years, the Office for National Statistics (ONS) said on Friday. Business investment was up by 0.5 per cent.

Overall growth overall quickened to 0.6 per cent from 0.4 per cent, unrevised from an initial estimate. “Our survey returns, which include the period leading up to and immediately following the referendum, show no sign so far of uncertainty having significantly affected investment or GDP,” ONS chief economist Joe Grice said in a statement.

The decision to leave the European Union cast an abrupt shadow over the economy, prompting the Bank of England to cut interest rates this month and piling pressure on new prime minister Theresa May to deliver a tax and spending boost.

Tough times ahead

While surveys suggest the June 23rd referendum has done little to dampen the spirits of consumers, tougher times may lie ahead as quickening inflation threatens to erode almost two years of real-wage growth.

The rise in business investment in the last quarter was driven by spending on transport equipment, including cars and planes, the ONS said.

The level of investment was 0.8 per cent lower than a year earlier. Net trade once again dragged on the economy, knocking 0.3 percentage points off growth in the second quarter as exports barely rose.

The 10 per cent fall in the trade-weighted value of the pound since the Brexit vote may aid exports but not by enough to prevent a sharp slowdown.

The economy will contract by 0.1 per cent in the third quarter, according to economists polled by Bloomberg between August 5th and August 12th. The pound showed little response to the figures in early trading on Friday.

Growth in the second quarter was heavily centred on April.

– Bloomberg