Download our March forecast to find out more about our latest predictions for the economic outlook. As with any prediction, these are based on current circumstances and are likely to change.
The story behind the numbers
While the market is cautiously expecting the Government to trigger article 50 this month and begin the long-awaited Brexit negotiations to leave the European Union, the Bank of England (BoE) optimistically revised its GDP growth forecast for the next three years with upwards targets being driven by a range of factors. These include BoE stimulus efforts which started in August, lower unemployment, a modest rise in inflation, looser fiscal measures and higher global growth forecasts. Governor Carney predicts the economy will grow by 2% this year matching the 2016 performance from an initial target of 1.4% pencilled at the end of last year.
As widely expected by the market, the UK Monetary Policy Committee of February unanimously voted to keep rates unchanged at 0.25% and to continue the previously announced Quantitative Easing programme. Disappointing economic indicators, as well as reports suggesting that Scotland may demand a second independence referendum have weighed on the UK currency and rates market. This was evidenced by the pound falling to a 7 week low against the dollar and 2 year swap rates plunging back below the 60 basis points mark to trade in the mid-high 50’s range.
Data produced 6 March 2017