How gloomy Treasury got its Brexit sums wrong: Britain defies doom predicted before the vote to see economy grow by 2% in 2016 

  • Output increased by 0.6 per cent in the final three months of the year – meaning the economy grew by a total of 2 per cent in 2016
  • The UK's economy is expected to have expanded more than those of any other G7 leading industrialised nation
  • The news makes a mockery of warnings that a vote to leave the EU would tip Britain into recession

By Hugo Duncan Deputy Finance Editor For The Daily Mail

Published: 20:37 EST, 26 January 2017 | Updated: 21:04 EST, 26 January 2017

Britain has defied predictions of doom to become the strongest major economy in the developed world, thanks to continuing growth following the Brexit vote.

Output increased by 0.6 per cent in the final three months of the year – meaning the economy grew by a total of 2 per cent in 2016.

The UK's economy is expected to have expanded more than those of any other G7 leading industrialised nation – the US, Canada, Japan, Germany, France and Italy, according to the International Monetary.

Brexit campaigners said the figures, from the Office for National Statistics, were 'the final nail in the coffin of Project Fear' – the name given to the gloomy predictions of Remainers prior to the EU referendum last June.

The news makes a mockery of warnings that a vote to leave the EU would tip Britain into recession.

Before the referendum, a Treasury 'dossier of doom' predicted the economy would shrink by up to 1 per cent in the third quarter and 0.4 per cent in the fourth following a Brexit vote.

The then Chancellor George Osborne said a vote to leave would be an 'immediate shock' that would 'push our economy into a recession'.

But Ian Kernohan, an economist at investment firm Royal London Asset Management, said: 'Far from plunging into recession after the vote to leave, the UK was actually the fastest growing G7 economy.'

Chancellor Philip Hammond said: 'Expectations expressed of a slowdown have yet to come to pass.'

He predicted an increase in business investment and exports and pointed out that an 'incredible' supermarket price war was keeping living costs down for millions. 

He added: 'There may be uncertainty ahead as we adjust to a new relationship with Europe, but we are ready to seize the opportunities to create a competitive economy that works for all.'

Mr Hammond welcomed 'very positive' signs that the weak pound had supported manufacturers

The ONS said the economy grew faster in the six months after the referendum than in the six months before as confident consumers went on a spree – in spite of dire warnings.

Gross domestic product – the annual value of goods and services produced in Britain, also called output – rose by 0.3 per cent in the first quarter of 2016 and 0.6 per cent in the second – the six months leading up to the referendum in June.

But it rose by 0.6 per cent in the three months after the Brexit vote and by the same amount in the final three months of the year.

Mr Hammond welcomed 'very positive' signs that the weak pound had supported manufacturers by boosting exports and added that business investment was likely to rise following a 'pause' after the referendum.

'As the future relationship between Britain and the EU becomes clearer to business we will see a large number of postponed investment decisions crystallising,' he said.

Neil MacKinnon, of Economists for Brexit and the banking group VTB Capital, said: 'The GDP numbers appear to be the final nail in the coffin of Project Fear, a deliberate campaign to mislead the public.'

It also emerged yesterday that mortgage lending hit a nine-month high in December. 

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