The warning lights are flashing once again
Adam Pike, News Editor
21 Jul 2016, 10:58 a.m.
Earlier this week the IMF and European commission both lowered their growth forecasts for the UK economy. The decision to exit the European Union has “thrown a spanner in the works” of the global economy according to the IMF. They now believe the British economy will grow by an anemic 1.3% in 2017.
As the economy grinds to a halt this forecast looks optimistic. It now appears more likely we are heading into another recession. Despite leaving rates unchanged in July the Bank of England is widely expected to slash rates when the Open Market Committee meets next month.
Andy Haldane, the Banks head economist has already discussed the need to act before the next crisis starts. Despite the surging stock market, it is doubtful the economy will suddenly improve.
Minutes from the Bank of England’s July meeting signals the bank is ready to act with a broad range of measures. This will involve cracking up the printing press and cutting interest rates close to zero.
Between October 2008 and March 2009 the Bank of England slashed interest rates from 5% to 0.5%. This time around the Bank England has far less room to manoeuvre. Phillip Hammond has only been in his job for a few weeks, but he needs to get up to speed quickly as the next crisis could be just around the corner.