United Kingdom economy expands on Brexit stockpiling

Media playback is unsupported on your device                  Media captionHammond Economy is robust

Britain's economy grew at a faster pace in the first three months of this year as businesses stockpiled goods to prepare for a Brexit deadline that has now been delayed. The optimistic data comes in defiance of fears of a "no-deal" Brexit that dominated the UK's political agenda at the beginning of the year.

Gross domestic product (GDP) growth rose to 0.5 per cent between January and March, according to the Office for National Statistics (ONS).

Manufacturing recorded a 2.2 percent rise in manufacturing.

Manufacturers delivered orders early as companies cleared their order books ready for the original Brexit withdrawal date of 29 March. UK-made medicines also met rife demand from continental Europe, driving the nation's exports as well. Real GDP growth is estimated to have contracted by 0.1% in March 2019. "When you look at the broader picture, what's happening in Germany, what's happening in the EU27, this is good solid performance for the United Kingdom economy, given the circumstances".

The UK's trade deficit doubled in 1Q19, from £8.9 bln to £18.3 bln, which is a negative development, given the gradual reduction of the deficit over the past few quarters.

However, he said that he remained sceptical about whether the consumer growth is likely to be sustained.

Production output increased by 1.4 per cent while manufacturing output grew 2.2 per cent - the biggest growth for more than 30 years - partly due to Brexit stockpiling.

Tej Parikh, a senior economist at the Institute of Directors, believes the strong three month figures could be "a flash in the pan".

Yet, in its latest quarterly forecasts released earlier this month, the Bank of England pointed out that although some stocks were being sourced from elsewhere, European Union firms were also stockpiling United Kingdom goods ahead of Brexit. Labour MPs say work productivity remains low, while gains in wages remain scant across many sectors of the economy. The Chancellor hailed the figures, but told us he expected companies to hold off on spending until a Brexit deal is done.

The first-quarter growth figure was meanwhile in line with market expectations. While a build-up of inventories boosted GDP by 0.7 percentage points, a large proportion of stocks were imported, meaning the economy suffered in its trade position.

The Government's consumption increased by 1.4 percent, up slightly on 1.3 percent in the final quarter of a year ago.

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