The Bank of England has blamed the “fog of Brexit” for putting the brakes on the economy as it forecasts growth for 2019 to be the slowest in a decade.
The Bank revised down the 1.7 per cent growth forecast it made in November to 1.2 per cent, making this the slowest rate of expansion since the recession of 2009.
The Bank said its survey of firms and wider evidence had indicated that Brexit uncertainty had intensified among the business community, with investment activity tailing off towards the end of 2018.
The Bank’s report reads: “Uncertainty appears to have risen recently, and may have weighed on investment by more than had been expected in August…Growth appears to have slowed at the end of 2018 and is expected to remain subdued in the near term.”
Bank governor Mark Carney says: “The fog of Brexit is causing short term volatility in the economic data, and more fundamentally, it is creating a series of tensions in the economy, tensions for business.”
The Bank also predicts a one in four chance of a recession in the second half of 2019.
Yesterday, the bank also chose to keep interest rates at 0.75 per cent, with commentators still uncertain as to whether inflationary pressures will soon force the bank to start ticking rates back up towards the 5 per cent levels seen pre-financial crisis.