UK economy seeks to balance Brexit with global strains
Britain’s economy, lifted by the country’s post-election political stability, risks fresh turbulence as Prime Minister Boris Johnson seeks tricky Brexit trade deals amid global threats that include the coronavirus.
Recent positive British economic data offset weaker figures at the end of 2019, but this is not expected to have a lasting impact despite government promises of major infrastructure spending.
On eve of Brexit, there is a strong possibility that the Bank of England will later Thursday announce its first interest rate cut in more than three years, as economic headwinds gather on the horizon.
“There’s still a huge amount of uncertainty over Brexit ahead of the deadline at the end of this year,” OANDA analyst Craig Erlam told AFP.
After Friday, Britain faces an 11-month Brexit period that expires on December 31, by which time Johnson will try to strike new trade deals with the EU and other countries around the world.
Erlam said that, despite data pointing to a slight uplift for the UK economy late last year, the outlook was far from rosy.
“If the government can do as they promise then the honeymoon can begin in 2021,” he said.
Investors have been reassured by December’s election triumph for Johnson’s right-wing Conservative party, which coasted to victory on a pledge to get Brexit done on January 31.
However, outgoing BoE governor Mark Carney earlier this month said Britain’s economic recovery is “not assured” despite a drop in Brexit uncertainties, prompting many analysts to forecast the central bank could cut its main interest rate by a quarter-point to 0.50 percent on Thursday.
That would be the first reduction since August 2016 -- when the BoE slashed rates to a record low 0.25 percent after the UK’s referendum vote in favour of leaving the EU.
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