Q3 GDP data confirmed the downtrend in company prices in order to get rid of the precautionary stocks accumulated since the start of the year in preparation for a no-deal Brexit. Overall, GDP grew by +0.3% q/q, -0.1pp below our forecast. Exports in volume have rebounded strongly to +5.2% q/q as export prices fell by -4.4% q/q, the strongest decrease since the 2000s. As a consequence, stocks have continued to decrease (-0.9pp to real GDP growth). Overall, net exports have contributed a strong +1.2pp to Q3 growth as import expansion was not as spectacular as in Q1 (+0.8% q/q). As expected, households have also purchased goods in preparation for a no-deal Brexit (+0.4% q/q) while companies have put on hold their investment plans (0% q/q for business investment). Going forward, we expect two quarters of negative growth (-0.1% q/q) in Q4 2019 and Q1 2020 on the back of earlier frontloading activities due to preparations for a no-deal Brexit. While uncertainty has decreased (we now assign a 10% probability to a no-deal Brexit on 31 January vs. 40% in September) we expect another Article 50 extension, given the upcoming elections on 12 December and the winter holidays.
