Britain’s National Institute of Economic and Social Research (NIESR) has said that U.K. GDP growth slowed to 0.7% for the three months ending August, down from 1.3% for the three months ending July.
The economy is expected to continue slowing, which means that U.K. interest rates will likely remain ultra-low for quite some time.
Niesr said in its latest report: “The pace of economic growth may have softened in the three months to August, but is still a robust rate for the UK,” however it added: “Unfortunately, the rate of growth will continue to decelerate over the coming months.”
The think tank predicted that the fragility of the economy recovery will lead the Bank of England to hold interest rates at their current record low of 0.5pc until at least next summer.
Here’s a chart we pulled from NIESR, below. It shows how the current U.K. downturn (in blue) has compared to previous ones. Interestingly, in terms of GDP change, the current U.K. recovery is on par with what was experienced during the early 1980s.