United Kingdom economy grows 0.5% in first quarter

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United Kingdom economy grows 0.5% in first quarter

United Kingdom gross domestic product expansion outpaced the 0.2% seen in the final three months of 2018, the Office for National Statistics said in a statement.

The report revealed that consumer spending rose 0.7% in the first quarter, possibly due to stockpiling ahead of Brexit.

Philip Hammond, the British Chancellor, said the first-quarter growth figures showed the United Kingdom economy was "robust", with growth of 0.5% in the first quarter "benefiting every major sector".

"It's not surprising to see households and businesses protecting themselves against a potentially disastrous Tory no-deal Brexit", Shadow Chancellor of the Exchequer John McDonnell said.

Tej Parikh, senior economist at the UK-based Institute of Directors, said that this growth could well be just "a flash in the pan".

"Some businesses brought activity forward early this year in preparation for leaving the European Union, so higher stocks and earlier orders have artificially bumped up the growth numbers".

GDP climbed by 0.5pc on the quarter, rebounding from 0.2pc at the end of 2018. The deadline has now been extended to October 31.

Reacting to the latest GDP data, British finance minister Philip Hammond described the United Kingdom economy as "robust".

The ONS noted that many manufacturers had delivered orders early, indicating a rush of activity as companies cleared out the order books in advance of the March 29 Brexit deadline.

However, some sectors - such as vehicle dealers, wholesalers and warehouses reported relatively little stockpiling.

The growth figure was in line with market expectations.

The central bank predicts British GDP expansion of 1.5 percent this year, up from its previous growth estimate of 1.2 percent.

However, Friday's ONS data unexpectedly showed a return to growth for business investment in the first three months of the year, after contracting for every quarter of 2018.

Sanlam UK CIO Phil Smeaton said while "political uncertainty still looms over the UK economy", with cross-party Brexit talks seeming unlikely to be fruitful, UK growth is still "holding up" amid job creation and rising wages. However, that boon is set to diminish in coming months and growth is expected to ease as the country hurtles toward its next Brexit date.

The strong manufacturing performance offset a slowdown in services sector output to 0.3%, the ONS data showed.

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