A Bentley production line in Crewe. A pick-up in the British economy in February was broad-based, with manufacturing rising 0.9 per cent and construction gaining 0.4 per cent. Image Credit: Bloomberg

London: The UK economy is on course for a stronger-than-forecast first quarter despite an escalating Brexit crisis that’s divided Parliament and the government.

Gross domestic product rose 0.2 per cent in February after a 0.5 per cent jump in January. That means the economy will expand 0.5 per cent in the first quarter if GDP is unchanged in March. That’s more than double the pace of the previous three months and faster than the Bank of England expects.

Some of the pick-up in growth may be due to Brexit stockpiling, with the statistics office reporting anecdotal evidence of companies bringing forward orders before the original March 29 deadline to leave the European Union. The UK’s departure now looks set to be delayed by as long as a year as leaders meet in Brussels Wednesday.

The data may provide some small cheer for embattled Prime Minister Theresa May as she awaits a final decision on the length of the delay to Brexit. European Council President Donald Tusk has rejected her request for a brief postponement and a longer period risks a backlash that could further destabilise the UK, both politically and economically.

The pick-up in February was broad-based, with manufacturing rising 0.9 per cent and construction gaining 0.4 per cent. The poorest performer was the dominant services industry, where output rose just 0.1 per cent. Financial services and insurance firms cut output for a 12th consecutive month, the longest run since records began in 1997.

“Today’s GDP data suggests growth rebounded in 1Q [first quarter] but the longevity of the bounce will depend on Brexit negotiations. If the impasse in Parliament is unlocked in coming weeks, we expect growth to remain close to trend this year. Further delays to exit day could easily scupper those plans,” said Dan Hanson, a Bloomberg economist.

Separate figures showed the trade deficit narrowed marginally in February to £14.1 billion ($18.4 billion; Dh67.64 billion). Exports rose but there was little evidence in the data of firms hoarding foreign goods in case of a no-deal Brexit, with imports falling in both value and volume terms.

The strength of February left GDP 2 per cent higher than a year earlier, the fastest annual growth rate since the end of 2017. But the first quarter will once again get no help from trade, with the deficit in goods and services set to widen against a backdrop of slowing global growth.