The UK’s sluggish economic growth has been kept on track by companies rushing to stockpile goods ahead of Brexit, official figures suggest.
GDP grew by 0.2% in February, the Office for National Statistics (ONS) said – a performance it described as “modest” but which was better than expected amid worries about Brexit uncertainty holding back business.
Britain’s factories did much of the heavy lifting, with the manufacturing sector growing by 0.9% in February, accounting for about half of the monthly growth rate.
The ONS said it saw signs that clients of manufacturing firms were stockpiling goods ahead of any border delays after Brexit – which had been scheduled for 29 March.
GDP fell by 0.3% in December and grew 0.5% in January so overall growth for the three months to February was 0.3%.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said February’s figures were “well above the consensus”.
He added: “The economy is continuing to withstand the uncertainty created by the Brexit process better than business surveys, which collectively have signalled flat-lining GDP, have suggested.
More from Business
Sir Richard Branson ‘devastated’ as Virgin Trains could disappear
New Debenhams owners line up European turnaround veteran
G4S shares surge as Canadian firm considers bid
Indivior shares crash after US indictment over opioid scheme
High street crisis: Record number of shops disappeared in 2018
Tesco boss ‘very confident’ after pre-tax profits up 28.8%
“Admittedly, the 0.6% month-to-month rise in industrial production in February, driven by a 0.9% leap in manufacturing output, was the main source of the upside surprise to the consensus.
“The might be due to a temporary boost to production from pre-Brexit stockpiling, which will unwind in Q2.”
Howard Archer, chief economic adviser at EY ITEM Club said the course of Brexit would be a large influence on the economy’s performance this year.
He added: “If Brexit is delayed for a prolonged period, extended uncertainty could make it a real struggle for the economy to grow by more than 1% this year – especially with the global economy soft.”
The International Monetary Fund (IMF) said on Tuesday that Britain would grow by 1.2% this year, if it could avoid the shock of a no-deal Brexit – faster than the level of expansion expected in Germany or France.
But Britain still looks set for its weakest growth in a decade in 2019, even assuming a deal is done, according to forecasts from the IMF and the Bank of England.
Nancy Curtin, chief investment officer at Close Brothers Asset Management, said British economic growth was “grinding to a halt” but this was not just a UK phenomenon.
She said: “Global trade has been hit by the ongoing negotiations between China and the US, damaging export figures across the EU, as well as the UK.
“There are reasons for optimism: better figures from the US, especially in the labour market, suggest fears of a slowdown may be overblown, while China’s manufacturing sector is picking up too.
“Persistent growth from the world’s two largest economies would go some way towards calming investors’ nerves.”