The Bank of England’s biggest ever cut of its growth forecast since it started making them shows that the vote to leave the European Union has damaged the UK economy – contrary to the claims of Vote Leave campaigners, who said it would lead to “prosperity”.
The Bank has slashed its growth forecast for 2017 from 2.3% to 0.8%, and cut its 2018 forecast from 2.3% to 1.8%. It expects unemployment to rise to 5.4% next year, and 5.6% in 2018, and expects inflation to overshoot the 2% target.
This has forced the Bank to cut interest rates to a record-low 0.25%, hammering savers in the pocket. The Bank will also spend £60bn buying UK government bonds, and £10bn buying corporate bonds.
It is now clear that the vote to leave the European Union means lower growth, higher inflation, fewer jobs, and ordinary people worse off. This is after Vote Leave cabinet ministers promised a Brexit vote would lead to “prosperity” and create 300,000 new jobs.
Mark Carney said that, as a result of the uncertainties caused by the referendum vote, “the MPC expects supply growth to remain well below past average rates throughout the forecast period.” The Bank also states that “following the United Kingdom’s vote to leave the European Union, the exchange rate has fallen and the outlook for growth in the short to medium term has weakened markedly.”
Commenting, Chuka Umunna MP, Chair of Vote Leave Watch, said:
“It’s clear that quitting the European Union has been a hammer-blow for working people across Britain. Thanks to the impossible promises of Vote Leave Tories like Boris Johnson, David Davis and Liam Fox people around the country will face job losses, higher prices, and falling pay packets – while they enjoy a promotion and sit around the cabinet table.
“The promises of Tory Leavers that Brexit would lead to higher growth and more jobs have never seemed so hollow. The myths told by senior figures in Theresa May’s new government will result in working people being worse off. They need to be held to account for the damage they have done to our economy.
“The UK is leaving the European Union but it is vital that the Government take strong measures to protect families, jobs and the economy. Theresa May now has a responsibility to get the best possible deal for the British people out of Brexit”