UK economy expands on Brexit stockpiling

LONDON (AFP) - Britain’s economy grew by 0.5 percent in the first quarter, boosted by companies stockpiling ahead of Brexit, official data showed yesterday.

Gross domestic product expansion outpaced the 0.2 percent seen in the final three months of 2018, the Office for National Statistics said in a statement, adding that manufacturing jumped 2.2 percent with recent surveys showing Brexit-facing companies building inventories.

The growth figure was in line with market expectations. The strong manufacturing performance offset a slowdown in services sector output to 0.3 percent, the ONS data showed.

The Bank of England last week raised its forecast for UK economic growth this year, as stockpiling offsets lower business investment elsewhere ahead of Britain’s departure from the European Union.

Economic activity was given a temporary boost as companies rushed to build up stocks of components and goods before the original March 29 Brexit deadline, the BOE said.

The central bank predicts GDP expansion of 1.5 percent this year, up from its previous growth estimate of 1.2 percent.

Following Friday’s data, the pound was little changed as first-quarter output of 0.5 percent had been widely forecast following the recent BOE update, analysts said.

Britain is due to leave the EU by October 31 after two delays this year triggered by MPS rejecting a divorce deal Prime Minister Theresa May had struck with the bloc.

The Bank of England meanwhile sees the boost to growth from stockpiling as only temporary, forecasting that GDP would slow to about 0.2 percent output in the second quarter of this year.