THE Bank of England has cut its UK growth forecasts sharply, unveiling the revised projections just days after the General Election.
In its latest quarterly inflation report, published today, the Bank has cut its projection of UK gross domestic product growth in 2015 from 2.9 per cent to a below-trend 2.5 per cent.
And it now expects growth to be below the UK's long-term average annual rate in each of the following two years as well.
The Bank of England has cut its forecast of growth in 2016 from 2.9 per cent to 2.6 per cent, again adrift of the long-term average rate put by Bank of England Governor Mark Carney at about 2.75 per cent.
And the Bank has reduced its projection of UK economic expansion in 2017 from 2.7 per cent to 2.4 per cent.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The Bank of England has significantly cut its GDP growth forecast for 2015 to 2.4 per cent from the 2.9 per cent expansion that had been projected in the February inflation report.It has also cut the 2016 growth projection and the 2017 forecast."
Figures published last month by the Office for National Statistics showed the UK economy grew by only 0.3 per cent in the opening three months of this year. This was only half of an already below-trend rate of expansion 0.6 per cent in the final quarter of 2014.
Mr Archer said: "While the marked cutting in the 2015 growth projection is partly due to the weaker-than expected first quarter growth of 0.3 per cent quarter-on-quarter, the overall downgrading of the growth forecasts reflects lower productivity expectations, a slightly higher level of [projected] interest rates than envisaged three months ago, and sterling strength."
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