BoE’s grim outlook highlights scale of the challenge for Rachel Reeves

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A photo of the Brown Photo of the British economy on Thursday, a photo of the Brown’s economy raised new concerns about the government’s efforts, as the Central Bank predicts a weak operation, higher inflation, growing unemployment and dramatic deterioration.

Bow’s Monetary Policy Committee Cut interest rates: With a quarter percentage point up to 4.5 percent, against the background of stagnant result and trade tension, two exchange rates that contribute to even greater cuts in order to avoid risks of more sharp decline.

The weakest worldview emphasizes the challenge facing Chancellor Rachel River that he promised that the growth was the number one government mission. Analysts report that it raised fresh questions about the fiscal worldview, taking into account the importance of strengthening tax revenues.

If the budget responsibility office, the government’s fiscal guard office must release the prospects of a deep growth, it will increase the risk that the channel will break its self-brought tax rules. Prospects for more weak growth meant that “the government must tighten its fiscal zone.”

Another stroke of government attempts to send up a upbeat message economyBOE short-term predictions indicate the acceleration of inflation by mid 2025 at the top of 2 percent target of boe.

Even if interest rates remain higher than the last market expectations, up to the end of 2027 with only two-four-quarter point reductions.

Meanwhile, GDP will grow only 0.75 percent this year before 2026 and 2027 will rise up to 4.75 percent.

Andrew Bailey, Float The governor strived to rotate the inflation forecast, saying that the time jump is mainly due to “temporary factors” that “are not directly related to the expenses and prices of the British economy.”

He said that the 20% increase in wholesale gas prices in Europe was the largest driver, he said, as well as the planned rise in buses and household payments. But Bailey also acknowledged that it was “greatly uncertainty” that could push inflation in any direction.

The biggest concern is that BOE has become more pessimistic about the interest rate when the British economy can grow without pushing inflation.

Its shares on the supply of the economy said that the possible growth rate of the United Kingdom, which is often described as a “speed limit” on a steady GDP growth, slowed down only 0.55 percent, only 0.55 dropped from 1.55. percent a year a year ago.

This meant that even the actual GDP growth stopped, only small margin in the British economy, which determines how slow demand is demand.

Boy’s painting is quite gloomy, said Andrew Verart, the British economist in Berenberg. “High inflation, despite weak growth, partly reflects the new verdict that the ability of the economy has weakened, and partially higher energy prices futures,” he said.

Bailey said that “the challenges reading data” were especially difficult for MPC what was happening.

The latest data reviews showed The population of the UK And the workforce grew up faster than previously thought he mentioned. And since we have not changed in GDP, we can only mathematically conclude that productivity is much worse. ”

The growth of employment is the fastest in parts of the public sector, such as education and health, which is difficult to measure in GDP.

All this meant the “speed limit [on growth] In the short term, it is low, “said Dave Regen, the deputy governor of Bow. However, he added that “a good reason to think effect” in the long run, as the structural reforms of the government began to repay.

Bounch predicts improvement of possible growth of years, as productivity is rising, but the prospect of GDP remains gloomy.

Bailey said that there is a danger that the increase in the budget tax could be stimulated by both cases, as it could not be reduced to staff in some areas.

Meanwhile, the business told Boey agents that they were rental and investment, tension, high-level loan costs and compressed money, as well as due to the budget.

Bailey said that MPC must “meet with a meeting at a meeting”, how far and how quickly it can reduce the pace because of these uncertainties. Analysts said the developments on the supply side will eventually be critical.

“We do not want to see what BOE happened in 2024, repeated on the supply over the next five years,” said Rob wood in Paneeconomics. “If the growth of productivity remains weak, both the prospect of living standards and the fiscal perspective [are] is going to be.