According to the Bank of England, the UK economy will need a financial boost this coming year. It seems having the second highest employment figure since records began, 76.1% in July-19, will not be enough to see the UK quit its injections of quantitative liquidity.
Unfortunately, employment figures alone are not enough to pull the British economy out of its hole. While some statistics such as employment are up, other areas are down.
Interest rates are expected to be cut in spring due to economic data indicating a bleak outlook for 2020. So far, three members of the voting committee of the Bank of England have revealed that they would consider voting for a rate cut depending on how the economy performs during the start of the year.
Outgoing Governor Mark Carney and MPC member Silvana Tenreyro have also announced their plans to vote for a rate cut if the economy continues to underperform.
Interestingly, this all came about after a November ‘dip’, which followed growth in GDP in September and October. Manufacturing fell 1.7% in November, but it was offset by a 2.2% increase in construction. The UK economy still grew over the three-month period from September to November.
On the Verge
However, the threat for the economy is its rate of growth, which for December was 0.4%; November was 0.3%, and the previous two months were -0.2. The economy is on the verge of a recession, and an increase in retail sales for the festive season may have been all that prevented an official recession.
The Bank of England forecasts a meaningful recovery as a result of the greater certainty the rate reductions will bring. The bank also suggests the added consumer confidence could also translate into greater spending.
These are all still speculations, but if the situation continues to worsen then a rate cut may be in store in 2020.Tags: economy