The Bank kept rates unchanged at 0.75%.
as uncertainties about Brexit have resulted in “slowed and volatile” growth in the U.K. economy.
The U.K. economy is now forecast to grow at a rate of 1.3%, down from an earlier projection of 1.5% in May. Meanwhile, growth forecasts until 2020 were cut to 1.3% from 1.6%. The Bank’s nine member Monetary Policy Committee, which sets interest rates, says the risk of the U.K. entering into recession is the highest since August 2016.
Investment from U.K. firms weakened “a lot,” in recent months, the Bank said, and has been weak since the EU referendum in 2016, while international trade tensions led to fewer exports and a slowdown in economic growth. Despite this, consumers are continuing to spend as businesses keep hiring more. Employment has risen steadily throughout the year, with unemployment levels reachingIf Brexit goes smoothly, the Bank expects it will have to increase interest rates to balance out a potential price rise in the goods and services we buy—a measure which will help keep inflation at the 2% target. Wages are expected to keep rising, which should reduce the squeeze on living standards as it outstrips inflation.
While the Bank has been working on the assumption of a smooth Brexit, it anticipates that in the event the U.K. leaves the EU without a trade deal, which is certainly not off the table under Boris Johnson, it would put pressure on the economy, pushing up prices and leading to a fall in the pound, while uncertain consumers cut back on their spending.
France Dernières Nouvelles, France Actualités
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