The Bank of England has warned that the uncertainty surrounding Brexit, which they claim has “intensified considerably”, is creating growing risks for the UK economy heading into 2019.
Lack Of Clarity
The Bank believes that a lack of clarity over the UK and its departure from the European Union is generating many problems, and has worsened over the last month. This has led them to lower previous forecasts of the growth of the economy in the final quarter of 2018.
Originally, the outlook was suggested to be 0.3%, but due to the impact of the reservation about the future, it has warned that the growth could be as low as 0.2%. This is down from 0.6% in the third quarter.
As expected, given the current weakness in global growth, the Bank’s monetary policy committee kept interest rates at 0.75% in its statement that was issued in December, but used the announcement to drop expectations moving forward.
The latest verdict comes in the week that Theresa May confirmed she would restart the parliamentary debate over her Brexit deal on January 9. However, it has already faced criticisms from Brexiteers who have accused the governor of the Bank of creating ‘Project Fear’.
The Bank downplayed these accusations, but the pound actually lifted on the initial release, which was not commented on in the Bank’s latest statement, a bizarre omission.
The surprise from the announcement was not necessarily what it contained – many expected no change in interest rates, for example – but the strong wording was something that stood out among most.
In many ways, the truth is difficult to ascertain in these uncertain times for the UK.