UK suffers weakest economic growth since 2012

Credit: Reuters Studio
Published on January 13, 2020 - Duration: 01:28s

UK suffers weakest economic growth since 2012

Expectations have been raised that the Bank of England will cut rates, after the UK saw its slowest economic growth in more than seven years in November.

David Doyle reports.


UK suffers weakest economic growth since 2012

The British economy has seen its most sluggish economic growth in more than seven years raising expectations that the Bank of England will cut interest rates later this month.

Official figures on Monday (January 13) showed the economy was just 0.6% larger in November than the year before, representing a significant slowdown from 1% growth reported the month before.

Sterling fell and government bond yields headed lower as financial markets priced in a 50% chance the Bank of England will cut interest rates on January 30, after the next meeting of its Monetary Policy Committee.

In November the Bank predicted limited fourth quarter growth, before a recovery in 2020.

That assumes progress towards a post-Brexit trade deal and a reduction in U.S.-China trade tensions - but in the past week BoE Governor Mark Carney has said a rate cut could be needed if those assumptions are overly optimistic.

Two other rate-setters from the nine-person Monetary Policy Committee agree that such a move could be required, while two more already back a cut.

The weak growth data represents uncertainty about Brexit in the month before Prime Minister Boris Johnson's decisive election win and there have been some signs that business confidence has since revived.

However, Johnson has only given himself 11 months to reach a long-term trade deal with the EU, after the UK leaves the trade bloc on January 31.

That's raised fears for some businesses that they could face tariffs and other obstacles to trade from 2021.

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