The Bank slashed this year’s growth forecast to 1.2 percent – the lowest since 2009, when the economy slumped 4.2 percent at the height of the recession. This shock downgrade compares with 1.7 percent predicted in Novermber, while the Bank has also cut its outlook for 2020 to 1.5 percent. The gloomy outlook came as policymakers at the nine-strong Monetary Policy Committee voted unanimously to keep interest rates chaged at 0.75 percent.
The Bank said growth likely halved to 0.3 percent in the final quarter of last year – down from 0.6 percent in the previous three month period and estimated it will fall again to 0.2 percent in the first quarter of 2019.
The Bank’s quarterly inflation report also warned interest rates may not rise until the second half of 2020 as fears around Brexit have seen businesses freeze spending, while consumer confidence has “weakened significantly”.
In minutes of the latest rates decision, the Bank said: “Since the Committee’s previous meeting, key parts of the EU withdrawal process had remained unresolved and uncertainty had intensified.
“Businesses had appeared increasingly to be responding to Brexit-related uncertainties and there were signs that those uncertainties might also be affecting household spending and saving decisions.”
This is a breaking story. More to follow.