The British economy is slowing — and it has killed any chance of a Bank of England rate hike

pulse

May 16, 2017 8:32 AM

'We believe this strengthens our view that the Bank of England MPC will leave its monetary policy stance unchanged over our forecast horizon (until end 2018).'

Mark Carney, Governor of the Bank of England, speaks during a question and answer session with Reuters Global Editor Alessandra Galloni at a Reuters Newsmaker event in London, Britain April 7, 2017

LONDON — New data from the Office of National Statistics on Friday, which showed UK GDP growth slowing to just 0.3% in the first quarter of 2017, has effectively killed off any chance that the Bank of England will raise interest rates in the foreseeable future, according to Barclays' UK economics team.

"The UK has only now begun to feel the beginning of the post-referendum slowdown.

"Given the ascent of headline CPI (which we expect to peak at 3.1% y/y in June and August), the increasing likelihood of negative real wage growth in the coming months, the likely tightening of unsecured consumer credit over the coming quarters (which has of late supported resilience in household consumption), as well as the lowest savings ratio since records began, we expect that UK GDP growth will continue to decelerate over the course of 2017 as households are forced to tighten their belts."

"All in all, we believe this strengthens our view that the Bank of England MPC will leave its monetary policy stance unchanged over our forecast horizon (until end 2018)."

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