LONDON- Britain’s economy grew at its weakest annual pace in more than seven years in November, raising expectations that the Bank of England will cut interest rates later this month.
Monday’s official figures showed the economy in November – before last month’s decisive election win for Prime Minister Boris Johnson – was just 0.6 percent larger than a year before, the weakest expansion since June 2012.
The November figure represented a slowdown from annual growth of 1.0 percent in October, after that month’s growth pace was revised up from previously reported data.
Output in November alone shrank by 0.3 percent, the biggest drop since April. Economists polled by Reuters had expected unchanged output for the month.
The weak data, reflected the uncertainty of last autumn about Brexit and the election, said John Hawksworth, chief economist for accountants PwC.
“It is too early to say for sure if economic momentum will pick up in the new year now the political situation is clearer, but our latest survey of the financial services sector with the CBI does suggest some boost to optimism since the election,” he said.
Sterling fell and government bond yields headed lower as financial markets priced in a 50 percent chance the Bank of England will cut interest rates on Jan. 30, after its next meeting.
The BoE predicted in November that the economy would eke out limited growth in the fourth quarter, before recovering in 2020. That forecast assumes progress towards a post-Brexit trade deal and a reduction in U.S.-China trade tensions. – Reuters