The Governor of the Bank, Mark Carney, of England has downgraded the Bank’s forecast for growth following the latest Inflation Report.
The Bank has held interest rates at 0.75% as Brexit uncertainty is set to see a growth slump to its lowest level for a decade.
Growth forecast has been slashed to 1.2%, the lowest since 2009 when the economy contracted by 4.2%, the Bank has also cut their outlook for 2020 to 1.5%.
UK Economist John Ashcroft stated in his Saturday Newsletter:
“No surprise, the MPC held rates with little prospect of an rate hike in the months ahead. “There is a story” the Governor began his opening remarks, “There is a story, that almost a century ago, The Times ran the headline ‘Fog in the Channel, Continent Cut Off‘”.
The Governor went on to reassure, that cutting off the continent was not the objective of Brexit. The UK is leaving the EU, not leaving Europe.
“We will pursue an ambitious and broad economic partnership”, he explained.
With less than fifty days to go, with no deal in sight, the Governor appears to know something, the rest of us, including Parliament, do not.
It was a week in which Chris Grayling had been cut off from Calais. The Chairman of the French port authority had said, “The Transport Secretary has been disrespectful, I never want to see him again”. Grayling plans to cut capacity through Dover and Calais. Capacity will be increased in other directions and by other means. More effort will be made to increase trade from Ramsgate to Ostend. A decision to award part of the £100 million contract to Seaborne shipping was reversed this week. A shipping company without ships, without experience and finance was considered to be a Bridge Too Far even for this administration.
Fog over Brexit has cast a cloud over the Bank of England. The Bank has cut the forecast for growth to just 1.2% this year. There is a one in four chance of recession if the UK leaves the EU without a deal. Fears over a no deal are haunting the board rooms of Britain. Investment decisions are on hold pending the outcome of negotiations with the EU. The good news? Inflation will remain at or around the target 2% and job growth remains strong as businesses continue to hire … for the moment …