The Bank of England cut UK growth forecasts today as it highlighted on “further intensification of Brexit uncertainties” as top of its concerns for the UK economy.
Meanwhile, interest rates were left at 0.75 percent on Thursday after a unanimous vote by the Monetary Policy Committee (MPC).
The MPC cut growth forecasts for the final quarter of 2018 to 0.2 percent, citing Brexit turbulence and a slowing global economy as main driving factors behind a fear of a slowdown in the UK economy.
The move marked a downgrade from 0.3 percent previously guided. It said that growth was “likely to remain around that level in the first quarter of 2019”.
In minutes of the MPC meeting, the Bank of England said: “The further intensification of Brexit uncertainties, coupled with the slowing global economy, has also weighed on the near-term outlook for UK growth.
“Business investment has fallen for each of the past three quarters and is likely to remain weak in the near term.
“The housing market has remained subdued. Indicators of household consumption have generally been more resilient, although retail spending may be slowing.”
The Bank said that the loosening of fiscal policy previously announced in the Government’s Budget “would boost GDP by around 0.3 percent over the MPC’s forecast period”.
This, in turn, is expected to boost inflation slightly during the second half.
The Bank expects inflation to fall below its 2 percent target in January to around 1.75 percent and “remain under target over the subsequent few months”.
