The Bank of England (BoE) has downgraded the UK’s growth forecasts over the next two years as ongoing geopolitical tensions continue.
According to the report published today, 01 August 2019, growth of the UK economy is expected to fall from 1.5 per cent to 1.3 per cent this year, and from 1.6 per cent to 1.3 per cent in 2020.
However, interest rates will remain unchanged at 0.75 per cent; a move which will be welcomed by both consumers and businesses alike. The BoE interest rate is set to be reviewed again on 19 September 2019.
The figures have been published as part of the BoE’s latest Monetary Policy Committee meeting.
Commenting on the impact of Brexit on monetary policy, the report says an increase in the “perceived likelihood of a no-deal Brexit” has further lowered UK interest rates and led to a “marked depreciation of the sterling exchange rate”.
Likewise, Brexit-related developments, such as stockpiling ahead of previous deadlines, are making UK data “volatile”.
This is demonstrated through weaker business investment and weaker global growth in net trade, as well as heightened uncertainty among the business community.
The report comes shortly after the Government announced that it will inject a further £2.1 billion to prepare for a no-deal Brexit. The move – which sees Brexit funding for this year double – aims to ensure that all Government departments are able to continue operating should the UK leave the EU without a deal on 31 October.
The cash will also be invested in new border force officers, customs agents and IT infrastructure to support overseas trading after Brexit, while £108 million will be available to support businesses to ensure they are ready for Brexit.
Commenting on the announcement, the new Chancellor of the Exchequer, Sajid Javid, said: “With 92 days until the UK leaves the European Union it’s vital that we intensify our planning to ensure we are ready.
“We want to get a good deal that abolishes the anti-democratic backstop. But if we can’t get a good deal, we’ll have to leave without one. This additional £2.1 billion will ensure we are ready to leave on 31 October – deal or no deal.”