UK growth to be cut in half as Brexit uncertainty hits Bank of England

Bank of England governor Mark Carney presented the latest findings.

Ongoing uncertainty about the UK's future has seen businesses cut spending and looks set to see Britain's growth cut in half, the Bank of England has said.

The Bank now expects the economy to grow by a miserly 0.2% a quarter this year, down from almost 0.4% the year before.

"Growth in the UK economy has been volatile this year in part because of Brexit preparations," the Bank said in its November Monetary Policy Report.

"We expect growth this year to be roughly half that in 2018."

Things were worse when it came to business spending, with investment falling for five quarters in a row.

"Uncertainty about the outcome of Brexit helps explain why UK growth has slowed," the Bank said.

"Uncertainty encourages businesses to delay spending on things like new machinery.

"We think that uncertainty about Brexit is the main reason why  by companies has been falling."

Before the EU referendum, business investment was growing by around 5% a year.

But that wasn't the only thing holding the UK back.

"Spending by households has also slowed but less sharply. Household spending has been supported by high employment," the Bank said.

The Bank also pointed to a global slowdown as one of the brakes on the economy.

"Lower growth elsewhere has reduced the demand for the goods and services that the UK sells abroad," it said.

Brexit wasn't the only concern though.

Dr Kerstin Braun of trade finance firm Stenn Group, said: "Even if we avoid a Brexit crash out, or if Brexit is scrapped all together, the UK is slowly running out of gas, driven down by persistent uncertainty and the flagging global economy.

"European stocks might be up after some tariffs have been rolled back, but it will take time to undo the damage caused by the trade war.

"This limbo is starting to feel like ‘the new normal’ when it should only be temporary. UK businesses need to be able to withstand the burden of this longer wait."

TUC General Secretary Frances O’Grady said: “This is the Conservatives’ economic legacy. Their decade of cuts and under-investment has put growth in the slow lane.

“When Britain needed rebuilding, they chose austerity and tax breaks for wealthy corporations. And they have damaged confidence in our economy by threatening a reckless no-deal.

“We need leaders who will put working families first, not their rich mates and donors.”

However, there was some good news.

"With the risk of a no-deal Brexit falling recently, we expect the uncertainty facing households and businesses to fall," the Bank said.