LONDON Morgan Stanley raised its growth forecasts for the United Kingdom after a spate of stronger-than-expected economic data, including retail sales and manufacturing surveys, and said it now expects Britain to avoid a technical recession in the second half of the year.
The bank upped its forecast for third-quarter GDP to growth of 0.3 percent versus a prior view of a 0.4 percent contraction. Morgan Stanley sees the UK economy growing 1.9 percent in 2016 from a previous 1.2 percent.
"A stronger 2Q and signs of 3Q resilience lead us to revise 3Q and 2016 GDP growth up," Morgan Stanley economists said in a note to clients.
"We still expect a Brexit slowdown and 4Q policy easing - but less than before - succeeded by a weak 2017 recovery," the bank added.
A closely watched monthly gauge of Britain's giant services industry published on Monday reported a record leap in activity in August, the clearest sign to date of a rebound from the initial shock of June's vote to leave the European Union.
(Reporting by Vikram Subhedar, editing by Nigel Stephenson)