Q1 GDP increased by +0.5% q/q in the UK. This was above consensus and our forecast of +0.3% q/q. Preparations for a no-Brexit deal have been stronger than anticipated from both companies and households. Stocks contributed a strong +0.9pp to Q1 GDP growth. And their contribution in Q4 was revised up to +0.8pp from +0.5pp. Imports rose by a very strong +6.8% q/q in Q1 while exports remained stable. Hence, net trade subtracted -2.1pp from GDP growth. Private consumption growth accelerated more than expected, to +0.7% q/q from +0.3% in Q4. Business investment unexpectedly rose (+0.5%) after four consecutive quarters of contraction, mainly driven by higher investment in IT equipment and other machinery and equipment. These figures should be interpreted with some caution as advanced indicators suggests that investment intentions remained weak in Q1. Public spending continued to provide support, expanding by +1.4% q/q after +1.3% in Q4. We maintain our forecast of full-year growth of +1.2% in 2019. Contingency stockpiling can last until Q3, but at lower pace – and a correction is expected in Q4 2019.
