News ID: 252587
Published: 1002 GMT May 10, 2019

Stockpiling boosts UK economy but slowdown appears under way

Stockpiling boosts UK economy but slowdown appears under way
DARREN STAPLES/BLOOMBERG

Brexit stockpiling and consumer spending spurred the British economy in the first quarter but a disappointing March suggested that a slowdown may already be well under way.

Growth accelerated to 0.5 percent from 0.2 percent in the final three months of 2018, the Office for National Statistics said on Friday, Bloomberg reported.

That beat the 0.4 percent expansion in the euro area in the first quarter.

The pickup came as manufacturers hoarded goods and ramped up production to meet orders from customers ahead of the original March 29 deadline to leave the European Union. Manufacturing output jumped the most since 1988 over the quarter.

Households, meanwhile, displayed continued resilience in the face of Brexit uncertainty as consumer spending rose at the fastest pace in two years. Businesses unexpectedly increased investment, ending four consecutive quarters of decline.

But while factories posted another strong March, construction shrank as did the dominant services sector. GDP overall fell 0.1 percent from February.

The rush to guard against possible supply disruptions has seen Siemens UK buy in railway components, Unilever stock up on ice cream and supermarket Tesco increasing supplies of tinned food. Stockbuilding contributed 0.7 percent to growth in the first quarter, partly offsetting a record drag from net trade.

With the Brexit deadline now extended, however, factories are expected to scale back production and meet demand from unsold goods instead. Car output is also predicted to slump after producers including BMW and Peugeot parent PSA went ahead with planned shutdowns last month, despite the delay to Brexit.

Business surveys for April were subdued and the Bank of England expects overall growth to slow to just 0.2 percent in the second quarter, leaving officials under no pressure to raise interest rates.

 

 

 

   
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Resource: Bloomberg
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