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UK economy grew at fastest rate since January in 3 months to May: NIESR

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Britain's economy grew at the fastest rate since January during the past three months, despite the upcoming European Union referendum, Britain's National Institute of Economic and Social Research said.

[LONDON] Britain's economy grew at the fastest rate since January during the past three months, despite the upcoming European Union referendum, Britain's National Institute of Economic and Social Research said.

NIESR's estimate of 0.5 per cent growth in the three months to May followed the release earlier on Wednesday of data showing an unexpected jump in industrial output in April, which contrasted with a stream of other data suggesting firms have held back on investment and hiring ahead of the vote on June 23.

"Growth so far in 2016 has remained relatively subdued," NIESR researcher James Warren said. "There remain specific uncertainties around the near-term outlook for the economy, most notably the outcome of the impending referendum."

Official data last month showed British gross domestic product rose by 0.4 per cent in the first quarter, slowing from the last three months of 2015.

Mr Warren said he expected growth to pick up further if Britain voted to remain in the EU, in line with a NIESR forecast last month that Britain's economy would grow by 2.0 per cent this year and 2.7 per cent in 2017 if it stayed in.

But if Britain voted to leave, sterling would fall by a fifth and GDP growth would be 0.8 percentage points lower than otherwise, NIESR predicted in May.

Opinion polls have shown the "Remain" and "Leave" campaigns have roughly equal support, with barely two weeks to go until the referendum.

Wednesday's data showed the biggest monthly jump in industrial output in nearly four years, bolstered by cars and pharmaceuticals.

Economists were cautious about whether it marked a genuine turnaround in the economy, which has slowed since the middle of last year due to weakness in China, and more recently due to nervousness about the referendum.

REUTERS