{"id":7232,"date":"2019-02-07T12:49:54","date_gmt":"2019-02-07T12:49:54","guid":{"rendered":"http:\/\/www.styledeals.co.uk\/blog\/bank-forecasts-worst-year-for-uk-since-2009\/"},"modified":"2019-02-07T12:49:54","modified_gmt":"2019-02-07T12:49:54","slug":"bank-forecasts-worst-year-for-uk-since-2009","status":"publish","type":"post","link":"https:\/\/www.styledeals.co.uk\/blog\/bank-forecasts-worst-year-for-uk-since-2009\/","title":{"rendered":"Bank forecasts worst year for UK since 2009"},"content":{"rendered":"\n<div property=\"articleBody\">\n<figure class=\"media-landscape no-caption full-width lead\"><span class=\"image-and-copyright-container\"><\/p>\n<p>                <img loading=\"lazy\" decoding=\"async\" class=\"js-image-replace\" alt=\"Workers\" src=\"https:\/\/ichef.bbci.co.uk\/news\/320\/cpsprodpb\/9F65\/production\/_105550804_workerscanarywhary_getty.jpg\" width=\"976\" height=\"549\"\/><span class=\"off-screen\">Image copyright<\/span><br \/>\n                 <span class=\"story-image-copyright\">Getty Images<\/span><\/p>\n<p>            <\/span><\/p>\n<\/figure>\n<p class=\"story-body__introduction\">The Bank of England expects growth this year to be the slowest since 2009 when the economy was in recession.<\/p>\n<p>It is forecasting growth of 1.2% this year, down from its previous forecast of 1.7% made in November. <\/p>\n<p>The Bank said it had seen further evidence that businesses were being cautious in the run-up to Brexit, including evidence from its own survey of firms.<\/p>\n<p>As expected the Bank kept interest rates on hold at 0.75%.<\/p>\n<p>The Bank put the fall in growth down to a decline in business investment and housebuilding, as well as a halving of the growth rate in exports.<\/p>\n<p>The UK was also being hit by slower-than-expected growth in the eurozone and China, <a href=\"https:\/\/www.bankofengland.co.uk\/inflation-report\/2019\/february-2019\" class=\"story-body__link-external\">the Bank said in its Quarterly Inflation Report.<\/a><\/p>\n<p>&#8220;Growth appears to have slowed at the end of 2018 and is expected to remain subdued in the near term,&#8221; it said.<\/p>\n<p>The Bank even sees a one-in-four chance of the economy slipping into recession in the second half of this year.<\/p>\n<h2 class=\"story-body__crosshead\">What did the Bank say about Brexit?<\/h2>\n<p>There has been an &#8220;intensification&#8221; of Brexit uncertainties, the Bank said.<\/p>\n<p>Its survey of 208 firms showed that half had started putting plans in place for a no-deal Brexit. The survey also showed that a fifth had taken on extra warehouse space<\/p>\n<p>It also noted a sharp fall in business investment at the end of last year.<\/p>\n<p>&#8220;Uncertainty appears to have risen recently, and may have weighed on investment by more than had been expected in August,&#8221; the Bank said.<\/p>\n<ul class=\"story-body__unordered-list\">\n<li class=\"story-body__list-item\"><a href=\"https:\/\/www.bbc.co.uk\/news\/business-47157411\" class=\"story-body__link\">Brexit stalemate scars prosperity, says Bank<\/a><\/li>\n<\/ul>\n<h2 class=\"story-body__crosshead\">When will interest rates rise?<\/h2>\n<p>Interest rates remain at 0.75%, where they have been since the Bank of England last raised in interest rates in August.<\/p>\n<figure class=\"media-landscape no-caption full-width\"><span class=\"image-and-copyright-container\"><\/p>\n<p>            <\/span><\/p>\n<\/figure>\n<p>Many economists think that once the uncertainty over Brexit is lifted then the economy will accelerate and the Bank will have to raise interest rates to stop it overheating.<\/p>\n<p>However, recent economic data has indicated weakness in the UK economy. Growth in the service sector, the biggest part of the economy, appeared to have stalled in January, <a href=\"https:\/\/www.bbc.co.uk\/news\/business-47127927\" class=\"story-body__link\">according to closely-watched survey of purchasing managers.<\/a><\/p>\n<p>Samuel Tombs, an economist at Pantheon Macroeconomics, predicts that the Bank will raise rates once this year and twice in 2020.<\/p>\n<p>Paul Dales, chief UK economist at Capital Economics, said: &#8220;We still think that a decent rebound in GDP growth, should a Brexit deal be reached, will result in interest rates rising further than the Bank and the financial markets assume.&#8221;<\/p>\n<h2 class=\"story-body__crosshead\">What effect is all this having on mortgage rates?<\/h2>\n<p>Moves in interest rates are important to the 3.5 million people with variable or tracker mortgages. Even a small rise of 0.25% can add hundreds of pounds to their annual mortgage costs.<\/p>\n<p>&#8220;It&#8217;s a very good time for people looking to borrow,&#8221; said Andrew Montlake, a director at Coreco, a mortgage broker.<\/p>\n<p>He said there had been a lot of competition among lenders in January, with some very good deals for five-year fixed mortgage deals. Some lenders are offering five-year fixed deals at below 2%, he said.<\/p>\n<p>Concern over Brexit has held back some people from borrowing. &#8220;There is a lot of pent-up demand,&#8221; said Mr Montlake.<\/p>\n<h2 class=\"story-body__crosshead\">Is the Brexit uncertainty hitting jobs?<\/h2>\n<p>While the Bank cut its growth forecast it also noted the strength of the labour market, where the unemployment rate is currently 4%.<\/p>\n<p>The rate at which people are switching to new jobs is only slightly below the level hit before the financial crisis of 2007.<\/p>\n<p>That switching suggests that employers are having to compete to attract staff, the Bank said.<\/p>\n<p>It also noted a pick-up in the average number of hours worked at the end of last year and firmer wage growth.<\/p>\n<h2 class=\"story-body__crosshead\">What does it all mean for our wages?<\/h2>\n<p>The Bank thinks that wage growth will increase in the coming years as the UK&#8217;s unemployment rate continues to fall.<\/p>\n<p>The main reason the Bank thinks underlying inflation pressures will grow is that wage growth will rise.<\/p>\n<p>Britain&#8217;s unemployment rate has hit its lowest level in more than 40 years. <\/p>\n<p>The Bank predicts that earnings will rise by more than 3% a year over the next three years.<\/p>\n<\/p><\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.bbc.co.uk\/news\/business-47155537\">Source<\/a> by <a href=\"\">[author_name]<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Image copyright Getty Images The Bank of England expects growth this year to be the slowest since 2009 when the economy was in recession. It is forecasting growth of 1.2% this year, down from its previous forecast of 1.7% made in November. The Bank said it had seen further evidence that businesses were being cautious &hellip; <\/p>\n","protected":false},"author":0,"featured_media":7233,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-7232","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts\/7232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=7232"}],"version-history":[{"count":0,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/posts\/7232\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/media\/7233"}],"wp:attachment":[{"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=7232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=7232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.styledeals.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=7232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}