Q2 GDP data shows UK's economy accelerated heading into the EU referendum

According to the first official estimate released by the UK’s Office for National Statistics (ONS), U.K. economy grew by 0.6 percent quarter-on-quarter in Q2 2016. Analysts had expected second-quarter economic growth to come in at 0.4 percent, with activity seen strong in April and May and much weaker in June, around the time of the referendum.

On a year-on-year basis, the UK economy grew at a pace of 2.2 percent, compared to 2 percent in the first quarter and was better than consensus for a 2.1 percent rise. The services sector grew by 0.5 percent during the quarter, while production increased 2.1 percent. The construction and agriculture sectors were drags on GDP, declining by 0.4 percent and 1 percent, respectively.

Data showed that UK's economy accelerated heading into the EU referendum. However, the impacts of ‘Brexit’ won’t be felt until at least the current quarter or later. The figures include data from the three months ending June 30, with the referendum having taken place on June 23.

"The comparatively strong outturn for Q2 points to some compensating weakness in Q3 GDP overall. On the basis of the very early evidence for July so far, we would expect GDP growth to stagnate over Q3 and likely over the second half of the year," said Lloyds Bank in a report.