Bank of England cuts growth forecast
Bank of England has cut its growth forecast for the UK economy over the next
Originally predicting that the UK economy would grow by 1.5 per cent this year, this figure has now been reduced to 1.3 per cent.
Similarly, the Bank’s forecast for growth in 2020 has also been reduced, dropping from 1.6 per cent to 1.3 per cent.
Interest rates were unchanged at 0.75 per cent because of weaker global growth and the ongoing trade tensions between China and the US.
However, these forecasts are liable to further change. This set of predictions was made based on the assumption that the UK leaves the EU with a deal; if the UK left with no deal, it is suggested that growth could be much slower.
Mark Carney, the governor, said: “In the event of a no-deal, no transition Brexit, sterling would likely fall, the risk premiums on UK assets would rise and volatility would spike higher.”
He also argued that uncertainty over Britain’s exit from the EU was affecting economic growth and the financial markets.
The quarterly Inflation Report, released by the bank’s Monetary Policy Committee, said there was a one-in-three chance that the economy will shrink at the beginning of next year.
It also said there had been a “material and broad-based slowdown” in world growth since 2017.