Based on MGRZ. The assumption is that Bank Rate remains at 0.75% throughout the three years of the forecast period, before moving towards the market path over the subsequent three years. Unit labour costs had nevertheless continued to grow at rates above those consistent with meeting the inflation target in the medium term. In a letter to the chancellor, Rishi Sunak, the Bank of England’s governor, Andrew Bailey, said the MPC had held rates steady despite a sharp fall in inflation in August to just 0.2%. But world growth is projected to pick up towards potential rates over 2020. Bank Rate maintained at 0.1% - December 2020. Alternatively, if pay growth is maintained without a pickup in productivity growth, unit labour cost growth could be stronger. The partial de-escalation of the US-China trade war provided some additional support to the outlook relative to the November Report, although trade tensions remained elevated. The indirect effects are assumed to be unchanged, at around 0.7% of PPP-weighted GDP. Greater trade frictions also add to firms’ costs, which puts a little upwards pressure on inflation. The NBU press office reported that on October 22.. Core inflation rose to 1.3% from August’s 0.9%. OECD, IMF, UN and EC show that in 2015 there was almost no inflation in the UK while, according to OECD, EC, and UN. This compares to 0.7% in 2020 Q1, 1.7% in 2021 Q1 and 1.9% in 2022 Q1 in the November 2019 Monetary Policy Report. While a range of output surveys deteriorated in 2019 Q4, the few surveys which have been taken since the general election have generally picked up. Regular annual AWE growth was around 3½% compared with around 4% during the middle of the year. The Bank of England cuts its 2015 growth forecast from 2.9% to 2.5%, as governor Mark Carney unveils his quarterly inflation report. (ac) Four-quarter growth in unit labour costs in Q4. Sterling implied volatilities had fallen back materially, including relative to implied volatilities in other currencies. Relative to the November forecast, growth slowed more than expected in 2019 Q4 and there is judged to be more spare capacity in the economy at present. The outlook for productivity growth will also be significantly affected by the nature and impact of the UK’s new trading relationship with the EU. Firm labour cost growth is assumed to push up inflation over the forecast period, consistent with the recent squeeze in consumer-facing companies’ profit margins coming to an end. The Bank expects inflation to reach 2% by 2023. Taken together, GDP is projected to be ¾% lower over the forecast period than it was in November. Bank of England kept UK rates at 0.1% and increased its bond-buying program by $195 billion, a little more than expected, as it cuts its economic growth forecasts. Wage growth is projected to pick up over the second half of the forecast period, supported by low unemployment. Further ahead, and conditioned on a market path for Bank Rate that falls slightly over the forecast period, the recovery in UK growth is supported by a pickup in global activity, a further decline in Brexit uncertainties and the Government’s announced spending measures. (c) Four-quarter growth in real GDP. Productivity growth is weak in the first part of the forecast period. The move to new trading arrangements between the UK and EU weighs on both imports and exports growth. Whole-economy measure. There is estimated to be around ½% of potential GDP of spare capacity in the economy currently (Table 1.A). Since 1998 based on IKBL-OFNN/(BOKH/BQKO). Consumption growth has slowed over the past year, however, and uncertainty may have contributed to weaker housing market activity and discretionary spending on durables. Over the forecast period, companies are judged to be unlikely to increase further the time and effort they spend on Brexit planning per year, so that ceases to act as a drag on productivity growth. It is also possible, especially further out in the forecast, that firms are able to cut back the amount of resources they spend on Brexit planning. In the central forecast, PPP-weighted world growth picks up from 2¾% in 2019 to 3¼% in 2020, and 3½% in 2021 and 2022. Political developments have led to an appreciation of sterling. Calculations for back data based on ONS data are shown using ONS series identifiers. The MPC judges that the risks around its projections for demand growth are broadly balanced. Would you like to give more detail? Including the backcast 2020 Q1 growth is 0.4%, 2021 Q1 growth is 1.4%, 2022 Q1 growth is 1.6% and 2023 Q1 growth is 2.0%. Chart 1.3 GDP projection based on market interest rate expectations, other policy measures as announced. 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