Global factors mean growth downgrades are no surprise
5 February 2016
• Bank of England downgrades UK GDP forecast for 2016 from 2.5% to 2.2%, and in 2017 from 2.7% to 2.4%
• Inflation forecast downgraded to 1.2% in Q1 2017, down from 1.5%
Commenting on the UK Inflation Report published today by the Bank of England, David Kern, BCC Chief Economist, said:
“In the face of growing international headwinds, as reflected in the weakening business sentiment recorded in our own surveys, it is not surprising that the Bank of England has downgraded its growth and inflation forecasts.
“Inflation is now predicted to stay below 1% throughout this year, and the UK economy is projected to grow at the same rate as last year.
“The government’s fiscal plans in the Autumn Statement were based on sustained growth. These downgrades should serve as a warning that this is not guaranteed, and more needs to be done to support the economy in the face of global trends.
“Against this background the bank’s calculations indicate that interest rates will only edge up very slightly next year, which should help to reassure businesses and consumers.”