Pound tumbles after Bank of England slashes growth forecasts
The central bank now expects growth in 2019 to come in at only 1.2 per cent, driven by slumping business investment
The pound tumbled against the dollar and the euro on Thursday afternoon after the Bank of England cut its growth forecast for this year and said the probability of a recession in 2019 was one in four.
Sterling fell 0.45 per cent against the dollar to hit £1.2874 and dropped 0.13 per cent against the euro to €1.1365.
The central bank’s monetary policy committee voted unanimously to hold interest rates at 0.75 per cent but warned that Brexit uncertainty will slash UK economic growth in 2019 to the weakest rate since the global financial crisis a decade ago even if the UK manages to secure an orderly departure from the European Union next month.
The central bank now expects growth in 2019 to come in at only 1.2 per cent, driven by slumping business investment.
Threadneedle Street also sees a roughly one in four probability of a recession in the second half of 2019.
“This slowdown mainly reflects softer activity abroad and the greater effects from Brexit uncertainties at home,” said the Bank, admitting that business investment had been considerably weaker than it previously anticipated due to fears over a Brexit cliff-edge for trade.