Bank of England cuts growth forecast on Brexit uncertainty and trade tension

The Bank of England has forecast a 30% chance that the UK economy will shrink at the start of 2020, amid growth of just 1.3% this year and next.

The forecast is based on a smooth transition to a Brexit deal and a disorderly exit would have more severe consequences.

The Bank left interest rates at 0.75%. It said that assuming a smooth Brexit and some recovery in global growth, it would be appropriate to raise rates “at a gradual pace and to a limited extent”.

But Tory Brexiteer Iain Duncan Smith said Carney’s forecast should be taken with a “massive pinch of salt” accusing him of reviving Project Fear and undermining Brexit negotiations.