The borrowing costs of UK households and businesses may rise in the event of a no-deal Brexit, the Bank of England has warned. The central bank stressed that it may not be able to cushion the economic blow of the UK leaving the European Union next March with no agreement. 

For now the base rate is held at 0.75% but the central bank forecasts growth of 1.3% this year, rising to 1.7% in 2019. The rationale behind expected increases irrespective of the Brexit outcome is that the economy is now broadly in balance, rather than in being material excess supply as it was then. Inflation is notably above target, not significantly below.

The Bank also stressed that a no-deal' scenario would probably cause another slump in the pound, pushing up inflation and supporting the case for borrowing costs to rise.

About the Author: Glen Callow

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