Brexit Behind Lower UK Growth Forecasts

Mark Carney says Brexit will continue to take a toll on U.K. investment and growth, and the Bank of England’s assumption of an orderly divorce from the European Union will be put to the test.

The BOE governor’s comments come after signs of slow progress in the initial round of exit talks as well as government squabbling after a poor election result in June. The central bank cut its forecasts for economic growth and wages and kept its benchmark rate at a record low. The predictions continue to assume a smooth Brexit and are based on a rate hike fully priced in by the third quarter of 2018.

The bank’s latest forecasts factor in “uncertainty about the eventual shape of the U.K.’s economic relationship with the EU,” which “weighs on the decisions of businesses and households and pulls down both demand and supply,” Carney said at a press conference on Thursday, speaking after the BOE’s policy announcement.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.