The UK’s Gross Domestic Product (GDP) may be proving a comfort to some but haven’t convinced everyone that the economy is resilient enough to weather the approaching Brexit storm.
Growth of 0.5% for the first three months of the year, showed a marked improvement from the previous figures, up from 0.2% in the last three quarters of 2018. However, growth could yet prove to be illusory given the industrial scale of stockpiling that’s occurred as a reaction to Brexit. Subsequent quarters will likely see businesses run down their excess, a process which in turn negatively impact GDP figures.
“With this government increasingly resembling a business entering administration it’s time they admitted the failure of their approach.”
Nonetheless, Chris Towner, Director at JCRA, was upbeat when he told the TFT that;
“The UK economy continues to prove its resilience despite Brexit. The unemployment rate is at a 45 year low at 3.9% and wage growth, including bonuses, hit 3.5% at the last count. This morning we saw growth in the first quarter increase by 0.5%, in line with market expectations and clearly stronger than the 0.2% growth we saw in the previous quarter. We saw a similar picture in Europe, with growth doubling from 0.2% in Q4 to 0.4% in Q1.
“Interesting to see a strong contribution to the overall GDP number came from business investment in the UK, which also grew by 0.5% in the first quarter of 2019. Sterling remains pretty much unchanged as the uncertainty of Brexit continues to put the economic fundamentals in the shade. This is a growing concern for Mark Carney, who clearly warned the financial markets last week not to underestimate the risks of tightening interest rates….time as always will tell.”
Labour shadow chancellor John McDonnell insisted that the figures were nothing to crow about when he told The Guardian;
“It’s not surprising to see households and businesses protecting themselves against a potentially disastrous Tory no-deal Brexit…With this government increasingly resembling a business entering administration it’s time they admitted the failure of their approach.”
The Labour shadow chancellor noted that the stagnation of wages, investment and productivity should also be considered when assessing the overall state of the economy.