GDP forecasts were downgraded in part as a result of Boris Johnson’s Brexit deal (Picture: PA)

The Bank of England has downgraded the country’s economic growth forecasts blaming Boris Johnson’s Brexit deal.

Governor Mark Carney told a press conference after the Bank held interest rates at 0.75%: ‘At a time when news about the political and economic outlook seems to move hourly, it’s important to step back and look at the bigger picture.

‘Globally, that big picture has darkened.’

Latest projections from the Monetary Policy Committee (MPC) forecast a slump in GDP of around 1% by the end of 2022, compared with forecasts from August.


GDP forecasts were downgraded to 1.2% for 2020 from 1.3%, and to 1.8% in 2021 from 2.3%, while the figure for 2019 was bumped up to 1.4% from the previous forecast of 1.3%.



The committee said that three-quarters of the projected slump was driven by the ‘weaker global environment’ and recent ‘moves in asset prices’.

It said the remaining quarter of the fall in projections came from the impact of the proposed Brexit deal and the 2019 spending round.

Boris Johnson tastes whisky during a general election campaign visit to Diageo’s Roseisle Distillery near Elgin, north east Scotland, today (Picture: AP)

This is the first time that a specific Brexit deal has been modelled into economic growth forecasts by the Bank, stating that the deal leaves it worse off than under previous Brexit assumptions – including Theresa May’s deal.

It said that forecasts had previously spread Brexit impacts on GDP over a 15-year period and the timeframe drafted by the deal has resulted in a significant downgrade in the near term.

The projections highlight that a greater proportion of the adjustment to new trading arrangements will take place in the next three years, causing a faster slowdown in growth.

Any deal would have led to a cut in growth forecasts, but increased certainty will help to drive a near-term pick-up in investment growth, the Bank added.

The central bank also held interest rates at 0.75% despite the first split decision on the issue in more than a year at its latest committee meeting.

Members of the nine-strong MPC voted seven to two in favour of leaving rates unchanged, after members Jonathan Haskel and Michael Saunders made the first call for a cut in more than three years.

NEW: Governor of Bank of England has said Boris Johnson’s Brexit deal would have a negative impact on the economy in the longer term. It’s a fairly small downgrade to GDP, but bad for PM and also raises questions about Bank intervening in an election. — Paul Brand (@PaulBrandITV) November 7, 2019

“The governor of the Bank of England says this deal is “positive for the economy,” says @sajidjavid. Which he has. But in the same breath he said it is much, much worse than remaining in the EU, and is also worse than Theresa May’s deal. — Tom Peck (@tompeck) November 7, 2019

Analysts had predicted that it would unanimously hold rates after the looming snap election was announced.

However, members of the MPC suggested at their last meeting that they could vote to cut rates if Brexit delays continued.

The MPC said that GDP expanded in the most recent quarter, rising 0.4% in the period from June to September, up from previous forecasts of 0.2%.

It said that, since its previous meeting, the decreased likelihood of a no-deal exit from the EU was somewhat offset by “signs of softer international growth”.

The Bank signalled that rates could be cut to 0.5% next year and held at that rate until 2022.

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