By Jason Douglas and Wiktor Szary

LONDON--The U.K. economy grew faster than previously thought in the three months following June's vote to leave the European Union, according to fresh growth estimates Friday that suggest there was no significant post-referendum slowdown.

Economists caution, though, that a looming squeeze on consumer spending from accelerating inflation will likely weigh on growth next year.

Following a raft of revisions based on new data, the U.K.'s Office for National Statistics said the U.K. economy grew 0.6% in both the second and third quarters of 2016. Earlier estimates suggested the economy grew at a slower 0.5% in the third quarter and a faster 0.7% in the second.

On an annualized basis, third-quarter growth was revised up to 2.3%, from 2.0% previously.

The ONS said the economy was powered largely by consumer spending, which offset a poor export performance. Output in the U.K.'s powerhouse services sector was also higher than previously estimated.

The latest data will be welcomed by Prime Minister Theresa May, who has said she will formally begin exit talks with the EU by the end of March.

The strength of the economy in the months after the vote wrongfooted many economists, who had expected an immediate slowdown. Still, officials at the Bank of England expect quickening price-growth to squeeze household budgets next year, and uncertainty over the U.K.'s future ties to the EU to dampen business investment.

Business investment rose 0.4% in the third quarter compared to the second, the ONS said Friday, a smaller rise than initially estimated. Overall capital spending was buoyed by government investment and construction.

The U.K.'s balance of payments with the rest of the world widened. The current-account deficit, the shortfall between earnings from overseas and payments abroad, grew to 25.5 billion pounds ($30.1 billion) in the third quarter, from GBP22.1 billion in the second. Britain's deficit in goods trade widened to a record GBP38.7 billion--though trade in services hit a record surplus of GBP25.1 billion. Earnings from Britain's overseas assets deteriorated.

Write to Jason Douglas at and Wiktor Szary at

(END) Dow Jones Newswires

December 23, 2016 04:52 ET (09:52 GMT)

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