October 23, 2018

BBC News – Brexit stockpiling ‘will hit economy’ in medium term

Brexit stockpiling may give Scotland’s economy a short-term boost, but will have a “negative” effect overall, the government’s top economist has said.

 

Dr Gary Gillespie said firms building up stock inventories before the UK leaves the EU could potentially boost Scotland’s GDP by 0.4%.

 

However he said this would be “more than offset” by a subsequent slowdown.

 

Dr Gillespie’s “state of the economy” report said there was an “improved outlook” despite the “risk” of Brexit.

 

The UK is due to leave the EU in March 2019, with negotiations ongoing about how the withdrawal will work and what the future relationship will look like.

 

The Centre for Economics and Business Research (CEBR) said in Septemberthat UK firms will have stockpiled an extra £38bn of goods by the time Brexit happens, claiming this was a factor in recent growth in gross domestic product (GDP).

 

Dr Gillespie echoed the think tank’s warning that this short-term boost could be followed by a slump.

 

He said: “Building stock inventories in advance of March 2019 may bring forward economic activity to this side of EU exit.

 

“Our new analysis suggests that while this could potentially boost Scottish GDP growth in 2018-19 by up to 0.4%, this would be more than offset by a slowing of output in subsequent quarters.

 

“The overall effect of stockpiling on the economy is negative in the medium term.”

 

View the full article here.

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