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Carney warns UK faces weakest growth in decade

May had "constructive" talks with Brussels while the BoE pulls back on its plans for interest rate increases.

Carney warns UK faces weakest growth in decade

Bank of England (BoE) Governor Mark Carney yesterday, 7 February said this year the UK economy would grow at its slowest rate since the 2008 financial crisis, blaming the “fog of Brexit”.

The BoE cut its growth forecast for 2019 from 1.7 per cent to 1.2 per cent and suggested that there was a one-in-four chance of a recession this summer. Carney also said growth would accelerate if there is more clarity about a deal with the European Union.

The Pound initially slipped but responded positively to Carney’s indication that growth could recover in the case of a soft Brexit. In a volatile trading session, Sterling traded as low as 1.2854 and as high as 1.2996 against the Dollar.

Meanwhile, Theresa May returned from Brussels empty-handed. However, there were some positives. A joint statement from the UK Prime Minister and European Commission President Jean-Claude Juncker suggested that further talks would take place before the end of February. Today, May flies to Dublin to meet with Irish Taoiseach Leo Varadkar to discuss the Irish backstop.

Across the Atlantic, the US-Chinese trade talks might have hit a stumbling block yesterday. US President Donald Trump said it was “unlikely” he would meet with Chinese President Xi Jinping before 1 March – the deadline for planned new tariffs on Chinese exports.

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