Posts Tagged ‘GDP Growth’

Bank of England must be wary of interest rate rise, says chief economist

Saturday, January 21st, 2017

The Bank of England

Andy Haldane says UK at risk of sharp slowdown as BoE weighs up conflicting forces of inflation from weak pound and the Brexit vote denting confidence. The Bank of England should be wary of rushing into interest rate rises to curb inflation, according to its chief economist, in a warning that the UK economy is vulnerable to a sharper slowdown next year than forecasts would suggest.

Andy Haldane said he was comfortable with the Bank’s current wait-and-see stance on borrowing costs as it weighs up the conflicting forces of a lower pound stoking inflation and the Brexit vote denting business confidence. In a bid to shore up confidence after the referendum, the Bank cut interest rates to a record low of 0.25% in August and expanded its programme of electronic money-printing, known as quantitative easing (QE). It had hinted at another interest rate cut before the end of the year but a flurry of brighter than expected economic news forced the Bank to row back on that guidance. Haldane said on Friday that economic output had outperformed the expectations of the Bank’s monetary policy committee (MPC) back in August while inflation had picked up, largely as a result of the pound’s sharp fall since the referendum, which makes imports to the UK more expensive. “That configuration now leaves me comfortable with the current stance of monetary policy, with no bias on the direction of the next move in interest rates,” he said.

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Britain’s economy could face £84bn black hole post-Brexit

Tuesday, November 29th, 2016

Image result for uk economy

Britain’s economy could face a black hole of £84bn ($102.3bn) by the time the Chancellor sets out his spending plans in the Autumn Statement next month, a think tank has warned.

According to a report from the Resolution Foundation, the deteriorating economic outlook, increased spending and lower tax receipts in the aftermath of Brexit could leave the government facing a shortfall until 2020-21.

The think-tank warned the Treasury would face a £23bn deficit at the end of the parliament, meaning the government would have to find a combined £84bn to balance the books over the next five years. However, the Foundation added, the only way to do so would be by implementing cuts or allow for extra borrowing.

George Osborne’s pledge to achieve a budget surplus by 2020 has already been abandoned by the government, which by then could be confronted with an economy £60bn smaller than it was expected to be before the referendum.

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