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Bank of England slashes UK growth outlook on Brexit
[LONDON] The Bank of England on Thursday slashed its forecast for UK growth this year to 1.2 per cent from 1.7 per cent, blaming the downgrade on a global economic slowdown and Brexit.
"UK economic growth slowed in late 2018 and appears to have weakened further in early 2019," the central bank said after the BoE said after keeping its main interest rate at 0.75 per cent.
"This slowdown mainly reflects softer activity abroad and the greater effects from Brexit uncertainties at home," it added.
Should British GDP come in at 1.2 per cent, it will be the country's weakest output in a decade.
The BoE had in November forecast 2019 growth of 1.7 per cent.
"Brexit uncertainties had intensified considerably since the Committee's November meeting," the BoE said Thursday.
"The economic outlook will continue to depend significantly on the nature of EU withdrawal," it added.
Plans for Britain to leave the European Union on March 29 under a withdrawal agreement signed last year were thrown into doubt when British lawmakers rejected the accord.
In London on Thursday, the BoE also slashed its forecast for 2020 UK growth - to 1.5 per cent from 1.7 per cent.
The downgrades sent the pound sinking under US$1.29, while the euro rebounded close to 88 pence.
"The pound has dropped to its lowest (dollar) level in almost three weeks... although it should be stated that the market reaction is fairly muted," noted XTB analyst David Cheetham.