Hard Brexit would probably lead to a weaker pound and slower growth, BoE warns
Thursday, 01 August 2019
The Bank of England said on Thursday that a hard Brexit would probably lead to a weaker pound. Credit: Pixabay
The Bank of England said on Thursday that a hard Brexit would probably lead to a weaker pound and slower growth in the United Kingdom.
The bank’s assessment comes at a time when the arrival of Boris Johnson at the head of the British government makes the prospect of a British withdrawal from the EU without an agreement between the two sides an increasingly likely one.
In the event of a no-deal Brexit, the exchange rate of the pound sterling would probably fall, inflation would rise and GDP growth would be slower, according to the minutes of the British central bank’s monetary policy meeting.
The Brexit deadline is 31 October and Johnson has warned that the U.K. would pull out on that date whether an agreement is reached or not.
In its quarterly inflation report, issued on Thursday, the BoE also lowered its growth forecast for 2019 and 2020 to 1.3% from the original forecast of 1.5% and 1.6% respectively, due to Brexit uncertainties and slower global economic growth.
These factors are expected to depress short-term growth even more that had been forecast in the bank’s May report, according to the members of its Monetary Policy Committee, who, unsurprisingly, unanimously decided to maintain the BoE’s interest rate at 0.75%.