By Wiktor Szary and Jason Douglas
LONDON--British firms appeared largely unfazed by the prospect of the U.K.'s exit from the European Union, official data showed Friday, with business investment slowing only slightly in the three months following June's Brexit vote.
The figures add to signs that the U.K. economy held up better than many had anticipated after the referendum, offering the first solid answer to fears that British companies would hold the economy back by scrapping or delaying their investment plans. But officials and analysts warn that a slowdown may still be in the cards when the U.K. launches official divorce proceedings early next year as planned.
U.K. businesses' capital spending increased by 0.9% in the July-September period compared with the preceding quarter, the Office for National Statistics said, and stood at GBP44.2 billion ($55 billion), as companies invested in buildings, machinery and equipment. The quarterly growth in investment was only a little weaker than in the preceding three-months, when it stood at 1.0%.
This appears to be in line with recent investments announced by internet giants Alphabet Inc., Google's parent company, which is going ahead with plans to open a new London campus, and Facebook Inc., which said it is adding 500 employees in the U.K. next year. Both have been hailed by pro-Brexit politicians as a vote of confidence in the U.K.'s future outside the EU.
Some smaller businesses also declined to take a wait-and-see approach. Dave Belmont, company secretary of West Yorkshire, England-based Acorn Mobility Services Ltd., a maker of stair lifts, said his firm pressed ahead with plans to expand overseas following June's Brexit vote.
"If you worry and fret and sit on your hands, then other people will do the business," Mr. Belmont said.
But the ONS and economists cautioned that it is likely that decisions on investment made in the three months after the referendum had been taken before the polling day.
"Projects to build planes, ships, buildings etc. will have been signed off 12-18 months ago and that activity won't shut off overnight," said Alan Clarke, head of European fixed-income strategy at Scotiabank.
Surveys of company executives have also signaled a coming slowdown. The Bank of England's network of regional agents has flagged weakening investment intentions in a monthly report for policy makers, while business services giant Deloitte LLP said last month that its quarterly poll of chief financial officers found less appetite for big outlays and hiring than there was before the referendum.
Gareth Jenkins, managing director of Llantrisant, Wales-based FSG Tool & Die Ltd., a manufacturer of tooling systems, said he imposed a six-month investment moratorium almost immediately after the referendum's outcome was announced.
"We've noticed that everyone's being super-careful," Mr. Jenkins said of his business partners, whose continued investment his company relies on.
"So we followed that almost instinctively and we said: 'let's just take some time out and figure out what comes next,' which I think has been wise."
Separately, the ONS also confirmed Friday its initial estimates of gross domestic product growth for the three-month period, which showed that the U.K. economy expanded at an annualized rate of 2.0%.
The expansion, which was broadly in line with historic trends, was driven by growing trade and consumer spending and strong performance of the U.K.'s powerhouse service sector, which appears to have been unfazed by Briton's decision to exit from the EU, the ONS said.
Write to Wiktor Szary at Wiktor.Szary@wsj.com and Jason Douglas at firstname.lastname@example.org
(END) Dow Jones Newswires
November 25, 2016 07:57 ET (12:57 GMT)
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