UK economic growth to remain ‘sluggish’: Bank of England

Bank of England Governor Mark Carney addresses the media during a press conference to deliver the quarterly inflation report in London on August 3, 2017. (AFP photo)

Britain’s central bank has cut it forecasts for the UK economy, saying it expects growth to remain "sluggish" over Brexit uncertainty.

The Bank of England on Thursday cut its annual growth estimate for 2017 to 1.7 percent from 1.9 percent previously, and for 2018 to 1.6 percent from 1.7 percent.

"Households looked through Brexit-related uncertainty initially, but more recently... they have cut back on spending, slowing the economy," the banks Governor Mark Carney told a press conference Thursday.

The bank's Monetary Policy Committee voted to keep its main interest rate at a record-low 0.25 percent following a regular policy meeting.

"GDP growth remains sluggish in the near term as the squeeze on households' real incomes continues to weigh on consumption," The bank said in a statement on Thursday.

On Tuesday, Bank of England employees went on a strike for the first time in more than 50 years over a pay dispute. About 150 workers picketed outside the bank’s headquarters in central London.

John McDonnell, the main opposition Labour Party's top economic official, attended the protest and called for the bank to set an example to employers by raising their wages. 

Rising levels of household debt could leave Britain's lower-income families dangerously exposed amid signs of an economic downturn linked to Brexit, Moody's credit rating agency said in his report published on Tuesday.

The credit rating agency has also warned in recent weeks of the potential economic damage if the UK fails to secure an exit trade deal with the EU.

Britain is experiencing a rapid decline in living standards with the biggest squeeze in workers’ pay since 2014, the Office for National Statistics said in June.

“Real wages have fallen for the second month in a row. Unless the government gets its act together, we’ll soon be in the middle of another cost of living crisis,” said Frances O’Grady, general secretary of union umbrella body the TUC.