The Bank of England has cut its forecasts for UK growth over the next two years.
It also warned that a no-deal Brexit would hit the economy and trigger a further drop in the value of the pound.
The Bank left interest rates unchanged at 0.75% against a backdrop of weaker global growth and ongoing trade tensions between the US and China.
It said the UK economy was expected to grow by 1.3% this year, down from a previous projection of 1.5% in May.
The Bank also cut its outlook for growth in 2020 to 1.3%, from a previous projection of 1.6%.
The forecasts are based on the assumption that the UK leaves the EU with a Brexit deal – however it suggested growth could be much slower in the event of no deal.
The Bank’s Monetary Policy Committee (MPC) that sets interest rates said the UK was likely to have stagnated in the three months to June.
Its quarterly Inflation Report predicted only modest growth in the coming months due to ongoing uncertainty over the UK’s future relationship with the European Union.
It said there was a one-in-three chance that the economy will shrink at the start of next year, with global trade tensions also weighing on the UK outlook.
And it said there had been a “material and broad-based slowdown” in world growth since the end of 2017.
There is a weather vane at the top of the Bank of England’s centuries old HQ that used to provide some early indication of when the winds were appropriate for the arrival of trading ships on the Thames in the need of its funds.
So thick is the Brexit fog in their attempts to assess the path for the economy, that the vane may well offer more clarity.
The Bank’s boffins have had to continue to assume that there will be a smooth Brexit, as that, officially, is the government’s policy.
The Bank did not choose to outline the detailed implications of a no-deal Brexit.
Predicting the path of the economy through the political machinations of a possible no deal Brexit is akin to driving with an iced up windscreen and a broken sat-nav.
