MNI DATA IMPACT: Brexit Distortions Lift UK Q1 GDP>

By Les Commons, Laurie Laird and Shaily Mittal

LONDON (MNI) - GDP growth accelerated to an as-expected 0.5% in the 

first quarter, a 1.8% annual gain, lifted by unique factors linked to 

the original March 29 Brexit date. 

The following are the key points from UK GDP data published Friday by 

the Office for National Statistics.

     - Manufacturing activity surged by 2.2%, adding 0.22 percentage 

points to total GDP growth, the biggest positive contribution since Q3 

1999. ONS officials noted widespread accleration of deliveries for both 

domestic and export orders. 

     - Government spending jumped by 1.4% in Q1, the biggest increase 

since Q1 2012, adding 0.25 percentage points to growth. A spokesperson 

would not be drawn on whether the leap was related to Brexit 

preparations, noting only that the additional expenditure was spread 

across government departments. 

     - The trade deficit ballooned to Stg18.337 billion in Q1, from 

Stg9.438 billion in Q4, subtracting a record 2.16 percentage points 

from total GDP growth. 

     - Business investment rose by 0.5%, breaking a four-quarter run of 

declines, the longest since the financial crisis. The spending was 

concentrated on information technology and plant and equipment. Again, 

officials refused to be drawn on a link to Brexit. 

     - Household spending accelerated to 0.7% from 0.3% in the fourth 

quarter, adding 0.42 percentage points to GDP. ONS officials were unable 

to provide a breakdown of spending.

     - Service sector growth slowed to 0.3% in Q1, with financial 

services continuing to dampen the sector, retreating by 0.4%, after a 

0.1% decline in the month of March. Financial services have not expanded 

for 15 straight months, the longest stretch of decline since records 

began in 1997.

     - The quarter ended on a weak note, suggesting a strong role for 

Brexit-related activity in the early months of 2019. GDP retreated by 

0.1% in March, with a 0.9% m/m increase in manufaturing providing the 

only real bright spot in the economy.