Bank of England (2)

The Bank of England has cut its growth forecasts for the UK economy in the next two years.

Having already suggested 2019 will be the worst year for the economy since 2009 at the height of the financial crisis, the Bank said it expects the economy to grow by 1.3% this year, which is down from May's prediction of 1.5%.

It also expects growth of 1.3% in 2020, down from its earlier forecast of 1.6%.

These forecasts are based on the UK leaving with European Union with a deal, however, the Bank warned that a no-deal Brexit would cause even slower growth in the economy and result in further falls in the value of the pound. In recent weeks, the pound has dropped to two-year lows, and there are growing concerns that it could even fall in line with the value of the euro and US dollar.

While projecting steady economic growth, inflation and employment numbers, the Bank of England suggested it would be "appropriate" to raise interest rates, which it maintained at 0.75%. Some analysts have questioned whether or not the Bank would be forced to cut rates back to 0.5%, where they spent much of the past decade, or even the historic low of 0.25% in the event of a no-deal. However, senior figures in the Bank has said on previous occasions that a no-deal Brexit would not be an automatic trigger for a rate cut.

The governor of the Bank of England, Mark Carney, said: "In the event of a no-deal, no transition Brexit, sterling would likely fall, the risk premiums on UK assets would rise and volatility would spike higher."

He added: "No deal as a crystallisation of a bad economic outcome is not preferable to the possibility of a better economic outcome.

"Whatever outcome the country chooses it is always preferable to have a transition to it. That is consistent with the preferences, the aims of this government, and consistent certainly with the aims of businesses up and down the country."