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| Carney warns Brexit uncertainty is building | |
| (35 minutes later) | |
| The governor of the Bank of England has warned that uncertainty over Brexit is already weighing on the economy. | |
| Mark Carney's comments came as the Bank voted to hold rates and cut growth forecasts. | |
| It edged this year's growth forecast down to 1.7% from its previous forecast of 1.9% made in May. It also cut its forecast for 2018 from 1.7% to 1.6%. | |
| The bank voted 6-2 to keep interest rates on hold at 0.25%. They have been at that level since August last year. | |
| Mr Carney said that business investment was slower than it would have been expected to be, due to Brexit: "It's evident in our discussions across the country with businesses... that uncertainties about the eventual relationship are weighing on the decisions of some businesses. | |
| "Investment has been weaker than we otherwise would have expected in a very strong world... So the consequence of that is starting to build... The judgement of the MPC... is that while we will see a rotation towards business investment... it is still below historic rates... the speed limit of the economy, if you will, has slowed." | |
| FTSE rises on Bank move | |
| Simon Jack: Wage squeeze to get tighter | |
| Weak wages | |
| It is also now gloomier on prospects for wage growth and thinks wages will grow by 3% in 2018 down from the 3.5% estimate it made in May. | It is also now gloomier on prospects for wage growth and thinks wages will grow by 3% in 2018 down from the 3.5% estimate it made in May. |
| Weak wage growth combined with rising inflation has been weighing on the spending power of households. | Weak wage growth combined with rising inflation has been weighing on the spending power of households. |
| There has not been a rise since July 2007. | There has not been a rise since July 2007. |
| Many economists think the UK could see a move this year and recent speeches by bank officials have raised that expectation. | Many economists think the UK could see a move this year and recent speeches by bank officials have raised that expectation. |
| Monetary Policy Committee (MPC) member Andrew Haldane recently said an increase might be "prudent" in the second half of this year. | Monetary Policy Committee (MPC) member Andrew Haldane recently said an increase might be "prudent" in the second half of this year. |
| Sterling effect | Sterling effect |
| The bank highlighted that the 18% fall in the pound since November 2015 has been raising the price of imports for the UK, which in turn has been making life more expensive for consumers. | The bank highlighted that the 18% fall in the pound since November 2015 has been raising the price of imports for the UK, which in turn has been making life more expensive for consumers. |
| Shoppers may have noticed significant increases in the prices of items like butter, meat and computer software. | Shoppers may have noticed significant increases in the prices of items like butter, meat and computer software. |
| The bank also said there had been evidence that spending on cars, home wares and electrical goods had been falling. | The bank also said there had been evidence that spending on cars, home wares and electrical goods had been falling. |
| It also noted weakness in the housing market and a fall in consumer confidence, which it thinks could indicate that households will curb their spending in the months to come. | It also noted weakness in the housing market and a fall in consumer confidence, which it thinks could indicate that households will curb their spending in the months to come. |
| The bank expects wage growth of just 2% this year, which is well below price inflation currently running at 2.6%. | The bank expects wage growth of just 2% this year, which is well below price inflation currently running at 2.6%. |
| To help bridge the gap between weak wage growth and inflation, consumers have been borrowing more, aided by low rates. | To help bridge the gap between weak wage growth and inflation, consumers have been borrowing more, aided by low rates. |
| In its report the bank said that interest rates on a £10,000 personal loan are close to record lows. | In its report the bank said that interest rates on a £10,000 personal loan are close to record lows. |
| Bank officials have been expressing concern about household debt. Last week, Alex Brazier, the financial stability director, warned that High Street banks risked entering a "spiral of complacency" over mounting consumer debt. | Bank officials have been expressing concern about household debt. Last week, Alex Brazier, the financial stability director, warned that High Street banks risked entering a "spiral of complacency" over mounting consumer debt. |
| Bank stimulus | Bank stimulus |
| Members of the MPC also voted in favour of extending a credit facility to British banks from £100bn to £115bn. | Members of the MPC also voted in favour of extending a credit facility to British banks from £100bn to £115bn. |
| The so-called Term Funding Scheme (TFS) runs until February 2018 and has already lent £78bn to banks at close to the bank's base rate of 0.25%. | The so-called Term Funding Scheme (TFS) runs until February 2018 and has already lent £78bn to banks at close to the bank's base rate of 0.25%. |
| The TFS is backed by the Treasury. | The TFS is backed by the Treasury. |