The struggling UK economy is getting a boost from Brexit stockpiling. UK GDP grew 0.3% in the three months to the end of February, the Office for National Statistics said last week. Economists polled by Reuters were expecting an expansion of 0.2%. Economists said the faster pace of growth was partly due to manufacturing businesses stockpiling materials and parts that would be harder to acquire if Britain crashes out of the European Union. The Office for National Statistics said that it had seen evidence that manufacturers were engaged in stockpiling as the original Brexit deadline approached. Economists expect there was even more stockpiling last month ahead of the original Brexit date of March 29. Howard Archer, chief economic adviser to the EY ITEM Club, pointed to a survey that showed manufacturing activity spiked to its highest level in 13 months in March.
It got a substantial lift from producers and their clients stockpiling inputs and finished products at a record rate to guarantee their supplies in case of a disruptive Brexit. Contrarily KPMG raises the interesting point that whatever view businesses take of the UK’s decision to leave the European Union, they would have been forced to confront supply chain transformation sooner rather than later. And that may turn out to be a very positive thing.
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