In the annual report to the Treasury Select Committee, BoE Governor Mark Carney said UK growth “slowed sharply in late 2018 and appears to have remained weak in early 2019”. The slowdown reflects both “softer activity abroad” and “greater effects from Brexit uncertainties”. Brexit uncertainties is “creating a series of tensions for business, households and in financial markets”. But that will only cause “short-term volatility in the economic data” and provide “less of a signal about the medium-term outlook”.
Carney added that the ” fundamentals of the UK economy are sound. The financial sector is resilient. Corporate balance sheets are strong. And the labour market is tight.” If the economic conditions evolve in line with BoE projections, which are conditioned on a smooth Brexit, “limited and gradual rate rises are likely to be needed to return inflation sustainably to target.”
