Pre-Brexit rush by manufacturers boosts UK economy in first quarter

Pre-Brexit rush by manufacturers boosts UK economy in first quarter

United Kingdom economic growth accelerated for the first quarter of 2019 which was driven by the highest pick-up in manufacturing since the 1980's. 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.

Following a full year of decline in 2018, business investment recovered to post a 0.5 percent increase in the first quarter of 2019.

This was boosted by a 2.2 per cent rise in manufacturing, the industry's highest output since the third quarter of 1988. UK-made medicines also met rife demand from continental Europe, driving the nation's exports as well. However, that boon is set to diminish in coming months and growth is expected to ease as the country hurtles toward its next Brexit date.

The rate of growth in the United Kingdom economy grew from 0.2 per cent in the last three months of 2018 to 0.5 per cent in the first quarter of this year.

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.

Economic growth picked up sharply in the first three months of the year as manufacturing surged at its strongest pace in more than 30 years.

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

"Some businesses brought activity forward early this year in preparation for leaving the European Union, so higher stocks and earlier orders have artificially bumped up the growth numbers", Tej Parikh of the Institute of Directors, a lobbying group, said.

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.

Last week BoE governor Mark Carney said he expected growth to fall back to 0.2 per cent during the current quarter as the one-off boost from stock-building faded and businesses continued to hold off from investment as economic uncertainty lingers. The growth rate was up from the 0.2 percent recorded in October to December past year.

In the first quarter, "businesses purchased more goods to keep in storage in the event of a no-deal Brexit affecting supply chains and the ability for businesses to the buy goods they need for production", the Centre for Economics and Business Research said in a note to clients on Friday.

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