UK economy on course for worst growth in a decade, says Bank of England

The UK economy is looking down the barrel at one of the worst years since 2009, with growth expected to slow to just 1.2% this year, leading the Bank of England to leave interest rates unchanged.

Bank of England Source: Bloomberg

The Bank of England (BoE) has warned that the UK is facing the weakest economic growth the country has seen in a decade, with the central bank blaming Brexit and the global slowdown, leading it to leave interest rates unchanged.

However, the BoE did say that it will raise rates if Theresa May is able to secure a Brexit deal and prevent the country bailing out of the EU without one.

The central bank reduced its 2019 economic growth forecast to 1.2%, down from its earlier estimate of 1.7% that it made in November last year.

UK economic growth continues to weaken

The global economy has continued to slow in recent months, reflecting a tightening in global financial conditions and the impact that trade tensions caused by Brexit and the strained relationship between US and China, the BoE said.

‘UK economic growth slowed in late 2018 and appears to have weakened further in early 2019. This slowdown mainly reflects softer activity abroad and the greater effects from Brexit uncertainties at home,’ the Bank’s policymakers said after voting unanimously to keep interest rates unchanged at 0.75%.

The BoE had previously warned that a no-deal Brexit could lead to foreign investment pulling out of Britain and could impact its economy more than the global financial crisis did more than 10 years ago.

Theresa May returns to Brussels to break Brexit deadlock

Britain is scheduled to leave the EU on March 29, with May heading back to Brussels in an attempt to gain concessions from EU officials with the aim of garnering support for her deal in parliament and avoiding a no-deal Brexit.

On Wednesday, EU Council President Donald Tusk said that Brexiteers deserve ‘a special place in hell’, with the outburst a clear sign of the growing frustration felt by officials in Brussels about Brexit.

If May is unable to return to Westminster with a provision to replace the controversial Irish backstop, then it looks likely that Britain could leave the bloc without a transition arrangement in place or be forced to delay Article 50.

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