Bank of England raises UK growth forecast again to 2% for 2017

The Bank of England has upgraded its growth forecasts for the next three years, crediting Government spending with helping the economy defy its previous Brexit slowdown fears.

But rate-setters still warned of a consumer spending slowdown over the next two years.

The Bank predicts household income will stall because of soaring inflation caused by the weak pound and poor wage growth.

What are the new growth forecasts?
In its quarterly inflation report, the Bank upped the forecasts it gave in November for rises in gross domestic product (GDP):

  • 2% Bank’s improved forecast for rise in gross domestic product in 2017 (up from 1.4%).
  • 1.6% Bank’s improved forecast for rise in gross domestic product in 2018 (up from 1.5%).
  • 1.7% Bank’s improved forecast for rise in gross domestic product in 2019 (up from 1.6%).

Policymakers at the Bank also voted unanimously to keep interest rates on hold at 0.25%.

It is forecasting inflation to hit 2.8% in the first half of next year, before falling back to 2.4% in three years.

The latest forecasts come after impressive growth of 0.6% in the final quarter of 2016 as GDP has remained surprisingly resilient since the Brexit vote last June.