Bank of England keeps bank rate at 0.75pc

Central bank cuts its economic forecast ahead of Brexit date

Analysts say UK factories ‘suffocating’ after worst output figures in seven years

Full report: Britain risks recession as no deal fears mount, Bank of England warns

The Bank of England has warned sterling could slip to a 34-year low and growth grind to a halt as no-deal Brexit fears hang over the UK economy.

Officials held the central bank’s target interest rate at 0.75pc, in line with expectations, but lowered their economic forecasts.

“Since May, global trade tensions have intensified and global activity has remained soft. This has led to a substantial decline in advanced economies’ forward interest rates and a material loosening in financial conditions, including in the United Kingdom,” members of the Bank’s Monetary Policy Committee said.

“An increase in the perceived likelihood of a no-deal Brexit has further lowered UK interest rates and led to a marked depreciation of the sterling exchange rate.”

The pound hit a 31-month low against the dollar in the run-up to the Bank’s decision, having dipped during Asian trading earlier today.

Purchasing managers’ index data released this morning showed the UK’s manufacturing sector underwent its biggest slowdown in seven years last month.