Brexit’s impact on UK GDP has been “relatively muted” since referendum, says Moody’s

Ratings agency Moody’s said today that Brexit’s impact on UK economic growth had been “relatively muted” since the referendum vote in June 2016.

Today, UK GDP growth undershot expectations considerably, edging up at 0.1 per cent, making it the slowest rate of growth for five years.

Moody’s has updated its latest Brexit Monitor, a regular report covering key economic and political developments surrounding the UK’s decision to leave the EU.

Read more: Poor GDP growth hits sterling “like a bucket of cold water”

Colin Ellis, Moody’s chief credit officer EMEA, and co-author of Brexit Monitor, said:

Although UK economic growth has slowed in the first quarter to 0.1 per cent, Brexit’s impact on UK GDP has been relatively muted since the 2016 referendum and is more benign than forecasts before the UK voted to leave the European Union.

Before the update from the Office for National Statistics today, much had been made of the expected impact from the Beast from the East, but the ONS said it was not the main culprit for the stagnant economic growth, despite forecasts that the bad weather in early March would freeze growth.

The ONS said that while snow had some impact on the first quarter GDP, particularly in construction and some areas of retail, it had “limited effect overall” and actually gave some boost to energy supply and online sales.

The largest downward pull on the first quarter result came from a 3.3 per cent fall in construction. While there was some evidence of an impact of the bad weather on construction output, the ONS said output had fallen across all three months of the quarter – not just during the period of bad weather.

Other sectors, such as services and production, grew by 0.3 per cent and 0.7 per cent from the fourth quarter of 2017.

Read more: The City reacts to GDP growth: “All but ended hopes for May rate rise”