Bank of England lowers UK growth forecasts

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A bus drives past the Bank of England after the British government triggered Article 50 of the Lisbon Treaty, in London, Britain on March 29, 2017. (Xinhua/Tim Ireland)

(AFP) – The Bank of England lowered its near-term economic growth forecasts yesterday amid continued uncertainty over Brexit, while warning that a “no deal” exit from the EU would hit growth and the pound.

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Members of the central bank’s monetary policy committee held the key interest rate at 0.75 percent.

In an accompanying inflation report, the committee said the British economy was now on target to grow by 1.3 percent in 2019 and 2020, down from the previous forecast of 1.5 and 1.6 percent respectively.

But these assume a “smooth adjustment” to Britain’s looming departure from the European Union, and the committee noted an increase in perceived risk that this will not be the case.

Boris Johnson took over as Britain’s prime minister last week, promising to deliver Brexit on the next scheduled departure date of October 31, with or without a deal with Brussels.

“In the event of a no-deal Brexit, the sterling exchange rate would probably fall, CPI inflation rise and GDP growth slow,” the minutes of the committee’s latest meeting said.

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