2019 looks set to be the worst year for UK since the recession of 2009
8 February, 2019
Yesterday the Bank of England forecast growth this year to be the slowest since the UK economy was in a recession back in 2009. So, for the first time in 10 years we see the UK going “backwards”. No doubt in anyone’s mind that this is due to Brexit. It forecast growth of 1.7% in November and has now revised this down to 1.2%. Businesses are being overly cautious and halting any business investment in the run-up to Brexit hence the downward revision as the uncertainty raises the spending declines naturally. The Bank of England even forecasts a 1-in-4 chance a recession in the second half of this year.
To quote the BBC the “Bank forecasts worst year for the UK since 2009” which has led to a fall in the GBP.
In other news, interest rates will remain the same for the next six months at 0.75%. It is believed that concerns and uncertainty over Brexit have also caused some people to hold back from borrowing.
Are there any other significant developments in Brexit? In a word no we still don’t have a deal and Theresa May still cant rectify the issue of the Irish backstop to get the deal through. With only seven weeks to go until the divorce deadline, this is worrying a lot of people and is concerning for the Pound as we could see further drops if we still have no deal in 7 weeks. That said, we did see the rate spike back up again later in the afternoon yesterday as May announced that the EU leaders want to ensure that Britain leaves the EU with a deal. To quote May, “what [she] can see and hear from leaders is a desire to work together to ensure that we can deliver the UK leaving the European Union with a deal”. Then later went on to clarify she is “clear that I am going to deliver Brexit, I am going to deliver it on time, that is what I am going to do for the British public. I will be negotiating hard in the coming days to do just that”
If you are looking to sell Pounds and buy Euros or any other currency then you may want to secure a rate now and reduce your uncertainty. No doubt there will be a lot of change over the next few days while May does her negotiating in Brussels and we wait and watch how it unfolds.