The Bank of England (BoE) has held interest rates at 0.75% due to a growth spurt in Brexit stockpiling however, the Bank warned the boost will be temporary as there is still much uncertainty.
The Monetary Policy Committee (MPC) unanimously voted to hold rates, the Bank now expects growth to surge to 0.5% between January and March, up by 0.2% in the last quarter of last year.
This is due to company’s stockpiling for the original EU withdrawal that was to happen on 29 March.
The Bank warned the fillip is to fade fast with growth expected to slow to 0.2% over the second quarter as the UK faces Brexit uncertainties.
The new EU withdrawal date of 31 October will prolong a slump in business investment, as companies are have put on hold spending decisions due to Brexit uncertainty over a deal.
The Bank said: “The underlying pace of GDP growth appeared to be slightly stronger than previously anticipated, but marginally below potential.
“That subdued pace reflected the impact of the slowdown in global growth and ongoing Brexit uncertainties.”
The Bank increased gross domestic product (GDP) growth outlook to 1.6% in 2020, 2.1% for 2021 which is up from 1.5% and 1.9% previously.
The Bank added, “As new Brexit deadlines approached, it was possible that businesses would continue to worry about adverse outcomes and delay capital spending as they waited for a resolution to emerge.”