7th August 2017

The Bank of England (BoE) has cut its growth forecast to 1.7% – down from 1.9% previously forecast in May 2017.

The BoE also reduced its growth forecast for 2018 from 1.7% to 1.6%.

This news comes as interest rates were held at 0.25% to stay in line with the 2% inflation target set by the Monetary Policy Committee.

Dr Adam Marshall, director general at the British Chambers of Commerce, said:

“In our view, the BoE forecasts are still slightly optimistic about the near-term outlook for the UK economy. We expect inflation to rise by more than the central bank is currently predicting, peaking at 3.4% this year. 

“Businesses continue to report rising prices at factory gates, which are squeezing profit margins and investment intentions.”

Mike Cherry, chairman at the Federation of Small Businesses, added:

“With inflation set to pick up again towards the end of the year, our entrepreneurs need support. Many are paying themselves less and further increasing prices in an attempt to handle the squeeze. 

“The last thing they need is hikes to stealth taxes, particularly fuel duty and insurance premium tax, as part of attempts to paper over gaps in the public finances.”

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