The Bank of England has revealed it expects the UK to have experienced zero growth in the second quarter of 2019, down from its previous estimate of 0.2 per cent.
Yesterday the Bank’s nine-member monetary policy committee, which sets interest rates, decided to leave the base rate at its current 0.75 per cent level.
The central bank stated that global trade tensions were negatively impacting growth, with trade disputes involving the US and China contributing to heightened economic uncertainty.
The minutes of the meeting stated: "Underlying growth in the UK appears to have weakened slightly in the first half of the year relative to 2018 to a rate a little below its potential."
The US Federal Reserve and the European Central Bank have both recently indicated that a worsening economic outlook means an interest rate cut may be needed to boost those economies.
The Bank of England has persisted with its view that in the UK, interest rate rises were likely to be needed in the medium term.
Michael Saunders, a member of the bank’s monetary policy committee, recently warned the UK economy was growing at close to its full potential and so interest rates may have to rise.
The Bank of England monetary policy committee expressed its official view that global events mean the economy is now back to growing at slightly below its long-term potential, meaning interest rates would not need to rise at this time.
The Bank's chief economist, Andy Haldane, has previously stated that the UK’s long-term potential growth rate has declined to 1.5 per cent, having previously been 2 per cent, with the decline being the result of lower population growth.
The current rate of UK inflation, at 1.9 per cent, remains below the bank’s target of 2 per cent.