Brexit stockpiling helps United Kingdom economy rebound in Q1


United Kingdom economic growth accelerated in the first quarter of this year, driven by the highest quarterly pick-up in manufacturing since the 1980s as the original Brexit deadline loomed. 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.

The UK economy grew 0.5% in the first quarter, according to preliminary figures released by the Office for National Statistics on Friday.

The UK's manufacturing output grew 2.2 percent, its quickest pace since 1988, officials said, as rising overseas demand for UK-made manufacturing goods drove the expansion and job creation in that sector.

The euro zone's economy expanded by 0.4 per cent in the three months to March, rebounding from a patch of sluggish growth in the second half of 2018 caused by global trade tensions and regulatory problems for the auto industry.

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.

The ONS said strengthened growth in the first three months of 2019 was "in part due" to the 0.3% GDP decline in December, "which makes the current period look stronger in comparison".

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

In the pharmaceuticals sector, growth was 9.4 per cent, mainly driven by a growth in exports, some of which "was likely in anticipation of the UK's original exit date from the European Union", the report said.

Sterling on Thursday dropped to $1.2967, its weakest in May, pushed lower by media reports that talks between the ruling Conservative and opposition Labour parties to agree a Brexit deal had run into the sand.

Production output increased by 1.4 per cent in the quarter.

Less positively monthly GDP figures for March came in at -0.1% against the flat month-on-month performance which had been forecast and the delay to Brexit means uncertainty is being prolonged for business.

The services sector, which accounts for more than three quarters of GDP, nudged ahead by 0.3% in the latest quarter, although all the uplift in activity was in January and February, while March registered a 0.1% fall.

Overall growth, which was in line with most predictions, was up from 0.2% in the previous quarter and slightly ahead of the 0.4% tick recorded by the 19-country eurozone.