Bank of England cuts forecast for UK growth
The Bank of England has announced cuts to its forecasts for UK growth over the next two-to-three years. A further statement warned that a ‘No deal’ Brexit would severely impact the economy and see the value of the pound drop even further.
The bank left interest rates unchanged at 0.75% against a backdrop of weaker global growth and ongoing trade tensions between America and China.
However, they expect the UK economy to grow by 1.3% this year. This is down from a previous projection of 1.5% in May. The bank also cut its outlook for growth in 2020 to 1.3%, from a previous projection of 1.6%.
Dr. Kerstin Braun, President of Stenn, an international provider of trade finance headquartered in the UK, commented: “We might have a new prime minister but the fundamentals in the UK remain the same, so this wait and see approach makes sense. The country is experiencing enough uncertainty and drama, with Boris Johnson reaffirming the threat of a hard Brexit, and the potential of a general election in the coming months.
“The real worry is the strength of the pound, which has now reached a 31-month low. Regardless of the Bank of England’s actions, there will still be a downward pressure on sterling. A lower pound rate will benefit UK exporters, but will also raise the consumer price for imported items such as food and fuel. And since the UK is a net-importer, the poor exchange rate is going to be felt across the board.”