Closing post
Time to wrap up…
The Bank of England has kept UK interest rates unchanged but warned Britain’s economy is on the brink of stagnation after Rachel Reeves’s budget as the world faces stubbornly high inflation and the risk of Donald Trump reigniting trade wars.
Holding interest rates at 4.75% in a widely expected decision, the central bank’s monetary policy committee (MPC) said on Thursday it had slashed its UK forecasts for the final three months of the year with a prediction of zero economic growth. The Bank had predicted growth of 0.3% as recently as November.
Highlighting the chancellor’s £40bn tax-raising budget, alongside rising geopolitical tensions and trade policy uncertainty after Trump’s November election victory, the MPC said growth was faltering while inflation risks remained.
The money markets now indicate the Bank will only cut interest rates twice next year, but some City economists predict four or even six quarter-point cuts.
The Bank was split 6-3 on the decision, with a trio of policymakers voting to cut interest rates. This has been taken as a dovish sign by some, pushing the pound down today.
In other news…
Water bills in England and Wales will rise by 36% over the next five years, as suppliers were accused of forcing struggling households to pay for years of underinvestment to fix leaky pipes and cut pollution.
Thames Water will have to pay an £18.2m penalty after the water industry regulator confirmed the troubled utilities company had breached dividend rules.
A Spanish state-owned shipbuilder will buy Belfast-based Harland & Wolff in a rescue deal that will secure all four of its shipyards and save about 1,000 jobs.
