U.K. Economy Shows Illusionary Strength On Brexit Stockpiling

The U.K. economy unexpectedly grew by 0.2% in February the Office for National Statistics (ONS) said this morning. Economists that had participated in a Reuters poll had expected zero growth.

The key driver to this unexpected burst of activity was stockpiling by manufacturers ahead of Brexit (whenever that may be). This enabled the U.K. economy grow by 0.3% in the three months to February.

The ONS pointed to manufacturers “…changing the timing of their activities …” ahead of U.K.’s departure from the European Union (EU). However, one must accept that except for stockpiling activities, U.K. economic growth is still modest. In the bigger picture all that has happened is there has been a slight front running of orders. Not because of confidence. In fact, the complete opposite is the case. Stockpiling has happened because of uncertainty.

I recognise that the U.K. economy has performed far better than many behind “Project Fear” at the time of the EU referendum suggested, however, it shown signs of slowing in recent months in line with the loss of momentum in both the European and wider global economy.

The International Monetary Fund (IMF), an institution that tends to paint a dour picture, said on Tuesday that Britain would grow by 1.2 % in 2019, provided it does no crash out of the EU with “No-Deal”. That would be a most acceptable level of performance given that the IMF has forecast German growth at a rather meagre 0.8%.

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