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Carney warns that No Deal Brexit could drive UK into recession

Mark Carney

Mark Carney: warning

The Bank of England has signalled that a No Deal Brexit could push the UK into recession after cutting its forecasts for growth over the next two years.

It also warned that No Deal could trigger a further drop in the value of the pound.

After leaving interest rates unchanged at 0.75% it revised its forecasts for UK economic growth to 1.3% this year from a previous projection of 1.5%. Its quarterly Inflation Report said there was a one-in-three chance that the economy will shrink at the start of next year, with global trade tensions also weighing on the UK outlook. The Bank cut its outlook for growth in 2020 to 1.3%, from a previous projection of 1.6%.

The forecasts are based on the assumption that the UK leaves the EU with a Brexit deal but warned that growth could be much slower in the event of no deal.

A survey from Bank of Scotland shows business confidence in Scotland fell to 0%, the lowest in the UK.

Fraser Sime, regional director at Bank of Scotland Commercial Banking, said: “Current political and economic uncertainties are clearly at the forefront of Scottish businesses’ minds.”

Across Scotland, a net balance of 25% of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, down four points on a month ago.

A survey from EY’s Item Club this week forecasted that output will improve only slightly in the following years.

It said the rise is likely to be slower than the UK as a whole, due to the slowdown of migration into Scotland.

But it said forecast growth in output of only 1% this year would be better than the risk of a “no deal Brexit”.

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