The UK economy will grow at its slowest rate since 2009 when it was in recession, according to forecasts from the Bank of England.
The Bank expects the economy to grow by 1.2% in 2019, down from the 1.7% it forecast in November.
It said there was growing evidence that businesses are being cautious as the deadline for the UK’s withdrawal from the European Union looms closer. In addition, slower economic growth in China and the eurozone also contributed to the reduction in forecast.
The Bank of England also said it believes there is a 25% chance of the UK economy falling into recession following Brexit.
Half of businesses surveyed said they had already put plans in place in preparation for a no deal Brexit, while a fifth had taken on extra warehouse space.
It comes after a study by IHS Markit/CIPS found that factories are increasing their stockpiles of raw materials over fears that Brexit could see prices rise and supply chains disrupted. A similar study then found that growth in the UK’s services sector, which makes up around 80% of the country’s economy, stalled in January.