The UK economy managed to beat analysts’ growth expectations for the rolling quarter to the end of February (the preceding three-month period) coming in at 0.3% rather than the more anaemic predicted level of 0.2%. The level of performance was nothing to write home about and was widely regarded as little more than a dead cat bounce, due mainly to manufacturers stockpiling materials against the disruption that most believe will ensue following Brexit. The imposition of some customs checks and inspections is likely to have a knock-on effect on “just in time” supply chains involving any components from the EU.
Taken as a stand-alone figure, the UK economy managed growth of 0.2% in February, better than the flat, 0% growth figure predicted.
The data was compiled by the Office for National Statistics (ONS). The ONS’s head of GDP, Rob Kent-Smith, characterised the growth by saying it “remained modest”, pointing out that manufacturers were “changing the timing of their activities” in anticipation of Brexit. He noted: "Services again drove the economy, with a continued strong performance in IT. Manufacturing also continued to recover after weakness at the end of last year with the often-erratic pharmaceutical industry, chemicals and alcohol performing well in recent months."
With Brexit delayed (almost certainly) until the end of October, it remains to be seen if manufacturers will continue to stockpile materials or run them down in anticipation of the delayed exit. There is considerable political uncertainty in the UK over Brexit with growing calls for a further referendum on the nations EU membership and demands that any deal passed by parliament must be subject to a confirmatory public vote which would pitch the deal against a remain option. For many months, opinion polls have consistently suggested that there is a clear majority in favour of remaining in the EU with the margin in favour slowly growing. In times of uncertainty, manufacturers have little choice but to ensure that the materials they need to continue production are on hand, so just in time manufacturing principles have been set aside.