Uncertainty around the future trading relationship between the UK and European Union will lead to two interest rate cuts by the Bank of England in 2020, a top-ranked research team said.
According to analysts at Bank of America Global Research, Britain’s gross domestic product was set to flatline in the last quarter of 2019.
However, rate-setters at the Old Lady of Threadneedle Street would wait to see how the economic data panned out following the general election before acting.
Their forecast was for a quarterly rate of growth of 0.0% over the three months ending in December.
“Uncertainty remains as unclear what UK-EU trade relationship will apply after next year. We expect short-lived growth bounce,” BofA said in a research note sent to clients.
Purchasing managers indices for the UK needed to “surge” in order to result in even a “mini” growth bounce, they added.
By Alexander Bueso