LONDON • The UK economy is on course for a stronger than forecast first quarter (1Q), despite an escalating Brexit crisis that’s divided Parliament and the government.
GDP rose 0.2% in February after a 0.5% jump in January. That means the economy will expand 0.5% in the 1Q, if GDP is unchanged in March. That’s more than double the pace of the previous three months and faster than the Bank of England expects.
Some of the pick-up in growth may be due to Brexit stockpiling, with the statistics office reporting anecdotal evidence of companies bringing forward orders before the original March 29 deadline to leave the European Union.
The UK’s departure now looks set to be delayed by as long as a year as leaders meet in Brussels yesterday.
The pick-up in February was broad based, with manufacturing rising 0.9% and construction gaining 0.4%.
The poorest performer was the dominant services industry, where output rose just 0.1%.
Financial services and insurance firms cut output for a 12th consecutive month, the longest run since records began in 1997.
“The GDP data suggests growth rebounded in the 1Q, but the longevity of the bounce will depend on Brexit negotiations.
“If the impasse in Parliament is unlocked in coming weeks, we expect growth to remain close to trend this year. Further delays to exit day could easily scupper those plans,” said Dan Hanson, a Bloomberg economist.
Separate figures showed the trade deficit narrowed marginally in February to £14.1 billion (RM75.72 billion). — Bloomberg