The Bank of England's (BoE) Monetary Policy Committee (MPC) has voted to lower the benchmark bank rate by 0.25 percentage points to 4.25 per cent, marking a cautious step towards easing policy amid ongoing progress on disinflation.
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This decision, announced on May 08, was passed by a narrow majority of 5-4. While two members advocated for a more significant 0.5 percentage point cut to 4 per cent, and two others argued to keep the rate unchanged at 4.5 per cent.&nbsp;
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The cut had been widely expected, especially after a slowdown in price rises, with inflation cooling to 2.6 per cent in the twelve months to March (from 2.8 per cent in February), as energy prices have retreated and the restrictive monetary stance has helped contain second-round inflationary effects.
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Despite the recent decline in inflation, the MPC remains cautious, stating that interest rates will need to stay in restrictive territory to guard against any persistent inflation pressures. The committee noted that inflationary risks could still shift in either direction, with global trade uncertainties and tariff-related volatility contributing to market fluctuations.
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&ldquo;We expect an increase in inflation this year. It is likely to rise temporarily to 3.7 per cent, partly because of higher energy prices. Inflation is expected to fall back to the 2 per cent target after that&hellip;There is also a lot of uncertainty from global developments, partly because of changes in global trade policies. We are assessing what this could mean for UK inflation closely,&rdquo; said BoE Governor Andrew Bailey.
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&ldquo;We need to be confident that inflation will remain low and stable in a lasting way. We will decide carefully how much further and how fast we can cut interest rates,&rdquo; he added.
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<h2>UK economy's health check</h2>
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The UK economy has shown signs of slowing growth, with GDP growth decelerating since mid-2024 and the labour market loosening. Wage growth, though still elevated, is expected to decline sharply later in the year. Energy prices have fallen, but increases earlier in the year are still expected to push inflation back up to 3.5 per cent by the third quarter of 2025 before easing once more.
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The underlying GDP growth is expected to have been around zero in 2025 Q1, well below the central bank&rsquo;s projection for headline growth of 0.6 per cent. The S&amp;P Global UK composite output PMI declined significantly in April, suggesting downside risks around the near-term outlook. Household spending growth has remained subdued over recent quarters, although real incomes have risen quite strongly such that the saving ratio increased to 11.6 per cent in 2024 Q4, its highest level since the pandemic.
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The country&rsquo;s employment growth has also softened recently, and the labour market has continued to loosen. The ratio of vacancies to unemployment has fallen further and is now judged to be below its equilibrium level.
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The central bank's May Report sets out two illustrative scenarios. In one scenario, there could be weaker supply and more persistence in domestic wages and prices, including from second-round effects related to the near-term increase in CPI inflation. In another scenario, inflationary pressures could ease more quickly owing to greater or longer-lasting weakness in demand relative to supply, in part reflecting uncertainties globally and domestically.
&nbsp;
The committee emphasised that monetary policy is not on a preset path and will be responsive to changes in the economic landscape.
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The future decisions on interest rates will depend on how inflation and the economy evolve, with the goal of returning inflation to the 2 per cent target in the medium term, the committee said in a statement.
&nbsp;
<h2>Who will it help?</h2>
&nbsp;
The Bank of England&rsquo;s recent 25-basis-point interest rate cut is set to benefit homeowners, particularly those looking to buy or remortgage. With a significant portion of UK homeowners on fixed-rate mortgages, the rate reduction is beneficial for those whose fixed-rate terms are ending in 2025, as it could lead to cheaper mortgage deals. While the cut won&rsquo;t impact those with existing fixed-rate mortgages, experts say it may help stimulate the housing market by improving affordability and providing lenders with room to compete, particularly among first-time buyers.
&nbsp;
In addition to this, the rate cut is also expected to benefit consumers and businesses. Borrowers with credit cards and personal loans may see lower interest rates, depending on their credit history. For businesses, particularly small and medium-sized enterprises, lower rates could make borrowing cheaper, providing relief after recent cost increases like the national minimum wage hike. With reduced borrowing costs, firms may have more cash for investment, potentially boosting consumer confidence and spending, helping the UK economy recover.

Business & Economy: Despite the recent decline in inflation, the MPC remains cautious, stating that interest rates will need to stay in restrictive territory

The Bank of England's (BoE) Monetary Policy Committee (MPC) has voted to lower the benchmark bank rate by 0.25 percentage points to 4.25 per cent, marking a cautious step towards easing policy amid ongoing progress on disinflation. This decision, announced on May 08, was passed by a narrow majority of 5-4. While two members advocated for a more significant 0.5 percentage point cut to 4 per cent, and two others argued to keep the rate unchanged at 4.5 per cent. The cut had been widely expected, especially after a slowdown in price rises, with inflation cooling to 2.6 per cent in the twelve months to March (from 2.8 per cent in February), as energy prices have retreated and the restrictive monetary stance has helped contain second-round inflationary effects. Despite the recent decline in inflation, the MPC remains cautious, stating that interest rates will need to stay in restrictive territory to guard against any persistent inflation pressures. The committee noted that inflationary risks could still shift in either direction, with global trade uncertainties and tariff-related volatility contributing to market fluctuations. “We expect an increase in inflation this year. It is likely to rise temporarily to 3.7 per cent, partly because of higher energy prices. Inflation is expected to fall back to the 2 per cent target after that…There is also a lot of uncertainty from global developments, partly because of changes in global trade policies. We are assessing what this could mean for UK inflation closely,” said BoE Governor Andrew Bailey. “We need to be confident that inflation will remain low and stable in a lasting way. We will decide carefully how much further and how fast we can cut interest rates,” he added. UK economy's health check The UK economy has shown signs of slowing growth, with GDP growth decelerating since mid-2024 and the labour market loosening. Wage growth, though still elevated, is expected to decline sharply later in the year. Energy prices have fallen, but increases earlier in the year are still expected to push inflation back up to 3.5 per cent by the third quarter of 2025 before easing once more. The underlying GDP growth is expected to have been around zero in 2025 Q1, well below the central bank’s projection for headline growth of 0.6 per cent. The S&P Global UK composite output PMI declined significantly in April, suggesting downside risks around the near-term outlook. Household spending growth has remained subdued over recent quarters, although real incomes have risen quite strongly such that the saving ratio increased to 11.6 per cent in 2024 Q4, its highest level since the pandemic. The country’s employment growth has also softened recently, and the labour market has continued to loosen. The ratio of vacancies to unemployment has fallen further and is now judged to be below its equilibrium level. The central bank's May Report sets out two illustrative scenarios. In one scenario, there could be weaker supply and more persistence in domestic wages and prices, including from second-round effects related to the near-term increase in CPI inflation. In another scenario, inflationary pressures could ease more quickly owing to greater or longer-lasting weakness in demand relative to supply, in part reflecting uncertainties globally and domestically. The committee emphasised that monetary policy is not on a preset path and will be responsive to changes in the economic landscape. The future decisions on interest rates will depend on how inflation and the economy evolve, with the goal of returning inflation to the 2 per cent target in the medium term, the committee said in a statement. Who will it help? The Bank of England’s recent 25-basis-point interest rate cut is set to benefit homeowners, particularly those looking to buy or remortgage. With a significant portion of UK homeowners on fixed-rate mortgages, the rate reduction is beneficial for those whose fixed-rate terms are ending in 2025, as it could lead to cheaper mortgage deals. While the cut won’t impact those with existing fixed-rate mortgages, experts say it may help stimulate the housing market by improving affordability and providing lenders with room to compete, particularly among first-time buyers. In addition to this, the rate cut is also expected to benefit consumers and businesses. Borrowers with credit cards and personal loans may see lower interest rates, depending on their credit history. For businesses, particularly small and medium-sized enterprises, lower rates could make borrowing cheaper, providing relief after recent cost increases like the national minimum wage hike. With reduced borrowing costs, firms may have more cash for investment, potentially boosting consumer confidence and spending, helping the UK economy recover.

Bank of England reduces interest rates to 4.25% as tariffs hit growth

The Bank of England (BoE) has raised its key interest rate from 3% to 3.5%, the ninth rate rise in a row.&nbsp;The central bank's Monetary Policy Committee (MPC) voted 6-3 in favour of the move and said that further increases in the bank rate may be required to tackle what it fears may be persistent domestic inflation pressures from prices and wages.&nbsp;

Issuing a statement on Thursday, the BoE said, "Domestic wage and price pressures are elevated. There has been limited news in other domestic and global economic data relative to the November Report projections.''

ALSO READ |&nbsp;<a href="https://www.wionews.com/business-economy/us-federal-reserve-raises-interest-rate-for-7th-time-this-year-heres-what-it-means-543234">US Federal Reserve raises interest rate for 7th time this year: Here’s what it means</a>

The BoE said that most indicators of global supply chain bottlenecks have eased, but global inflationary pressures remain elevated.&nbsp;

"Bank staff now expect UK GDP to decline by 0.1% in 2022 Q4, 0.2 percentage points stronger than expected in the November Report. Household consumption remains weak and most housing market indicators have continued to soften. Surveys of investment intentions have also weakened further," Thursday's statement said.&nbsp;

The BoE added that although labour demand began to ease, the labour market remained tight.&nbsp;

ALSO READ |&nbsp;<a href="https://www.wionews.com/world/banknotes-featuring-queen-elizabeths-picture-remain-legal-tender-bank-of-england-514312">Banknotes featuring Queen Elizabeth's picture remain legal tender: Bank of England</a>

The central bank further said that the employment rate rose slightly to 3.7% in the three months to October. ''Vacancies have fallen back, but the vacancies-to-unemployment ratio remains at a very elevated level,'' the statement said.&nbsp;

In November, the BoE had said that Britain was entering a long recession and predicted that the economy would shrink by 0.3% in the final quarter of 2022, a report by news agency Reuters said. However, now it expects a fall of 0.1%.&nbsp;

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The Bank of England (BoE) has raised its key interest rate from 3% to 3.5%, the ninth rate rise in a row. The central bank's Monetary Policy Committee (MPC) voted 6-3 in favour of the move and said that further increases in the bank rate may be required to tackle what it fears may be persistent domestic inflation pressures from prices and wages.

The Bank of England (BoE) has raised its key interest rate from 3% to 3.5%, the ninth rate rise in a row. The central bank's Monetary Policy Committee (MPC) voted 6-3 in favour of the move and said that further increases in the bank rate may be required to tackle what it fears may be persistent domestic inflation pressures from prices and wages. Issuing a statement on Thursday, the BoE said, "Domestic wage and price pressures are elevated. There has been limited news in other domestic and global economic data relative to the November Report projections.'' ALSO READ | US Federal Reserve raises interest rate for 7th time this year: Here’s what it means The BoE said that most indicators of global supply chain bottlenecks have eased, but global inflationary pressures remain elevated. "Bank staff now expect UK GDP to decline by 0.1% in 2022 Q4, 0.2 percentage points stronger than expected in the November Report. Household consumption remains weak and most housing market indicators have continued to soften. Surveys of investment intentions have also weakened further," Thursday's statement said. The BoE added that although labour demand began to ease, the labour market remained tight. ALSO READ | Banknotes featuring Queen Elizabeth's picture remain legal tender: Bank of England The central bank further said that the employment rate rose slightly to 3.7% in the three months to October. ''Vacancies have fallen back, but the vacancies-to-unemployment ratio remains at a very elevated level,'' the statement said. In November, the BoE had said that Britain was entering a long recession and predicted that the economy would shrink by 0.3% in the final quarter of 2022, a report by news agency Reuters said. However, now it expects a fall of 0.1%. WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Bank of England raises key interest rate from 3% to 3.5% in bid to tackle domestic inflation

It has been barely a few weeks since the Liz Truss government took charge in the UK but looks like the wheels are already coming off. Currently, in a major economic crisis, the UK will need to cut as many as 200,000 government jobs in the next two years to avoid saddling the exchequer with billions in debt, per a report by Institute for Fiscal Studies (IFS).

It has been barely a few weeks since the Liz Truss government took charge in the UK but looks like the wheels are already coming off. Currently, in a major economic crisis, the UK will need to cut as many as 200,000 government jobs in the next two years to avoid saddling the exchequer with billions in debt, per a report by Institute for Fiscal Studies (IFS). The think tank said that the government will have to find a way to pay nearly $5.6 billion of savings to the workforce this year, accounting for the public sector wages that are set to increase by five per cent. It added that over 100,00 job cuts will ensure that the wage bill remains unchanged, at least for this year. However, it added the caveat that if inflation continues to increase at the current pace, the UK government might have to go on another spree and slash the workforce by another 100,000. Notably, during the pandemic, the public sector workforce of the UK grew by a quarter of a million to 5.5 million. Thus, the government is already looking to tone down the bureaucracy and cut nearly a fifth of the headcount which could essentially save $3.8 billion. WATCH | UK Economy: Chancellor Kwasi Kwarteng rolls back decision on tax cuts × The IFS report comes in the backdrop of the UK government having been forced to abandon its plan to abolish the 45 per cent top rate of income tax. The humiliating u-turn was necessitated days after announcing the policy change and on the back of a turbulent reaction from the markets as well as the conservative party. Such has been the economic downturn in the UK that according to the Bank of England, the pension funds which are managing vast sums on behalf of retired people in the country came close to a collapse after an “unprecedented” meltdown in the government bond market. Read more: Report: UK bank says pension funds nearly collapsed amid ‘unprecedented’ market meltdown The Bank of England stepped in late September to temporarily buy bonds after the British pound collapsed and reached its lowest ever in history against the dollar. (With inputs from agencies) WATCH WION LIVE HERE:

Liz Truss government may have to cut 200,000 jobs to stay afloat: Report

Before the Omicron variant struck in November, the UK economy had increased faster than projected, returning to pre-pandemic levels for the first time.

The Office for National Statistics (ONS) reported that gross domestic product (GDP) increased by 0.9 percent in November, compared to 0.1 percent in October.&nbsp;

The holiday season made a significant contribution to the economy's rebound.&nbsp;

The ONS claimed that an increase in restaurant bookings and a quick turnaround in building output were also factors in the expansion, which lifted the economy's size by 0.7 percent above its March 2020 level.&nbsp; 
 
<a href="https://www.wionews.com/india-news/british-pm-bats-for-india-uk-fta-says-deal-takes-ties-to-next-level-444315">Also read | British PM bats for India-UK FTA; says deal takes ties to 'next level'</a>

City economists predicted a 0.4 percent expansion and that November would be a high point in 2021, with the ONS data arriving just as the Omicron variant took hold, increasing workforce shortages and prompting the government to impose plan B limits.

It followed a 0.2 percent rise in October.

Another factor driving the rise in GDP, according to the ONS, was the continued expansion of health services as a proportion of economic activity.

Business organisations cautioned that the economy remained sluggish in the face of growing inflation and the Bank of England's threat of raising interest rates.&nbsp;

According to the ONS, the world's fifth-largest economy was 0.7 percent larger in February 2020 than it was in February 2019.

Despite the acceleration in growth in November, GDP is likely to have suffered a knock in December as the Omicron coronavirus type spread over the world.&nbsp;

(With inputs from agencies)

Before the Omicron variant struck in November, the UK economy had increased faster than projected, returning to pre-pandemic levels for the first time. The Office for National Statistics (ONS) reported that gross domestic product (GDP) increased by 0.

Before the Omicron variant struck in November, the UK economy had increased faster than projected, returning to pre-pandemic levels for the first time. The Office for National Statistics (ONS) reported that gross domestic product (GDP) increased by 0.9 percent in November, compared to 0.1 percent in October. The holiday season made a significant contribution to the economy's rebound. The ONS claimed that an increase in restaurant bookings and a quick turnaround in building output were also factors in the expansion, which lifted the economy's size by 0.7 percent above its March 2020 level. Also read | British PM bats for India-UK FTA; says deal takes ties to 'next level' City economists predicted a 0.4 percent expansion and that November would be a high point in 2021, with the ONS data arriving just as the Omicron variant took hold, increasing workforce shortages and prompting the government to impose plan B limits. It followed a 0.2 percent rise in October. Another factor driving the rise in GDP, according to the ONS, was the continued expansion of health services as a proportion of economic activity. Business organisations cautioned that the economy remained sluggish in the face of growing inflation and the Bank of England's threat of raising interest rates. According to the ONS, the world's fifth-largest economy was 0.7 percent larger in February 2020 than it was in February 2019. Despite the acceleration in growth in November, GDP is likely to have suffered a knock in December as the Omicron coronavirus type spread over the world. (With inputs from agencies)

British economy reaches back above pre-COVID level for first time

The British economy has shrunk by a record due to COVID-19 lockdowns to 20.4% in a quarter from April to June. Watch report.

Record fall in UK economic output | COVID-19 crisis | World News

The Bank of England expects UK'S economy to fall by 14% in 2020. The country could face its worse economic collapse in 300 years. WION's Palki Sharma gets you a report.

Gravitas: Coronavirus | The abysmal state of British economy

Britain's economy is on course for an unprecedented 7% quarterly contraction after measures to slow the spread of the coronavirus forced company closures across the country last month, a business survey showed on Tuesday.

Britain's economy is on course for an unprecedented 7% quarterly contraction after measures to slow the spread of the coronavirus forced company closures across the country last month, a business survey showed on Tuesday. Adding to the bleak mood, figures earlier on Tuesday showed monthly car sales had dropped to their lowest since 1946 due to the closure of showrooms, while around a quarter of workers are now on a government-funded furlough. IHS Markit said its Purchasing Managers' Index (PMI) for the services sector fell to its lowest since the survey started in 1996, dropping to 13.4 in April from 34.5 in March, only a fraction better than an initial flash estimate of 12.3. Last week's manufacturing PMI was similarly dire and IHS Markit said that, taken together, they pointed to the deepest economic downturn "in living memory". A composite PMI of the two sectors dropped to a record-low 13.8 in April from 36.0 in March, far below the 50 mark that divides growth from contraction, indicating a 7% quarterly fall in gross domestic product, IHS Markit said. "We expect the actual decline in GDP could be even greater," IHS Markit economist Tim Moore said. Britain's services PMI does not include retailers, who have been hardest hit by store closures since the March 23 lockdown, or many of the self-employed. Howard Archer, economist for forecasters EY ITEM Club, said he expected GDP to fall by around 13% in the second quarter, assuming some lifting of restrictions. Economies across the world have been battling the economic consequences of the coronavirus pandemic. Flash euro zone PMI data also hit a record low last month, and final figures are due on Wednesday. Last month, government budget forecasters set out a scenario under which the British economy could contract as much as 35% in the three months to June due to the lockdown, and for annual output to fall by the most in more than 300 years.

British economy on track for biggest contraction 'in living memory'

Britain's economy cooled in the three months to November, expanding at its weakest pace in six months as factories suffered from tough global trade conditions ahead of Brexit, official data showed on Friday.

Gross domestic product in the three months to November was 0.3 per cent higher than in the previous three-month period, down from growth of 0.4 per cent in the three months to October and matching the consensus of a Reuters poll of economists.

Manufacturers suffered their longest period of monthly falls in output since the financial crisis, hurt by weaker overseas demand, the Office for National Statistics said.

Worries about the global economy have been mounting due to concerns about a trade war between the United States and China. Figures from Germany and France earlier this week similarly showed falling industrial output.

Britain's economic growth in the three months to November was driven mostly by the dominant services sector, as well as the construction industry.

The figures fit with business and consumer surveys that suggest the economy is slowing sharply after robust growth of 0.6 percent in the third quarter of the year, reflecting growing uncertainty ahead of Britain's planned departure from the European Union, as well as global jitters.

Britain is due to leave the European Union on March 29 and whether businesses will still be able to trade without disruption to cross-border supply chains remains unclear.

The future of the deal which Prime Minister Theresa May has agreed in principle with the EU hangs in the balance ahead of a parliamentary vote which will take place on Tuesday.

May is widely expected to lose and this would leave open the prospect of Britain leaving the EU without any transitional arrangements to smooth the economic shock.

Calls for a second referendum - which May has rejected - are growing.

Friday's figures showed that compared with a year earlier, the economy stood 1.4 per cent larger. In November alone, it expanded 0.2 per cent, compared with forecasts for a rise of 0.1 per cent.

The data are broadly in line with the Bank of England's view that the economy is likely to have grown around 0.2 per cent over the fourth quarter of 2018.

Britain's economy slowed after the June 2016 Brexit vote, its growth rate slipping from top spot among the Group of Seven group of rich nations to mid-table or lower.

Consumers in particular were squeezed by the jump in inflation which followed the pound's tumble after the referendum, especially as wages have failed to keep up.

That said, an unusually warm summer in mid-2018 encouraged many to splash out on drinks and pub and restaurant visits.

But retail sales data suggests consumers reined in spending over Christmas.

Earlier this week closely watched purchasing managers' surveys pointed to fourth-quarter growth of around 0.1 per cent in Britain, according to data firm IHS Markit which compiles the surveys.

Friday's data showed that Britain's services sector grew by 0.3 percent over the three months to November, while industrial output dropped by 0.8 per cent, the biggest decline since May 2017.

Looking at November alone, industrial output dropped 1.5 per cent on the year - the biggest fall since August 2013.

Separate figures showed Britain's goods trade deficit widened unexpectedly in November to 12.0 billion pounds from 11.9 billion pounds, worsened by the highest oil imports since September 2014.

Britain's economy cooled in the three months to November, expanding at its weakest pace in six months as factories suffered from tough global trade conditions ahead of Brexit, official data showed on Friday.

Britain's economy cooled in the three months to November, expanding at its weakest pace in six months as factories suffered from tough global trade conditions ahead of Brexit, official data showed on Friday. Gross domestic product in the three months to November was 0.3 per cent higher than in the previous three-month period, down from growth of 0.4 per cent in the three months to October and matching the consensus of a Reuters poll of economists. Manufacturers suffered their longest period of monthly falls in output since the financial crisis, hurt by weaker overseas demand, the Office for National Statistics said. Worries about the global economy have been mounting due to concerns about a trade war between the United States and China. Figures from Germany and France earlier this week similarly showed falling industrial output. Britain's economic growth in the three months to November was driven mostly by the dominant services sector, as well as the construction industry. The figures fit with business and consumer surveys that suggest the economy is slowing sharply after robust growth of 0.6 percent in the third quarter of the year, reflecting growing uncertainty ahead of Britain's planned departure from the European Union, as well as global jitters. Britain is due to leave the European Union on March 29 and whether businesses will still be able to trade without disruption to cross-border supply chains remains unclear. The future of the deal which Prime Minister Theresa May has agreed in principle with the EU hangs in the balance ahead of a parliamentary vote which will take place on Tuesday. May is widely expected to lose and this would leave open the prospect of Britain leaving the EU without any transitional arrangements to smooth the economic shock. Calls for a second referendum - which May has rejected - are growing. Friday's figures showed that compared with a year earlier, the economy stood 1.4 per cent larger. In November alone, it expanded 0.2 per cent, compared with forecasts for a rise of 0.1 per cent. The data are broadly in line with the Bank of England's view that the economy is likely to have grown around 0.2 per cent over the fourth quarter of 2018. Britain's economy slowed after the June 2016 Brexit vote, its growth rate slipping from top spot among the Group of Seven group of rich nations to mid-table or lower. Consumers in particular were squeezed by the jump in inflation which followed the pound's tumble after the referendum, especially as wages have failed to keep up. That said, an unusually warm summer in mid-2018 encouraged many to splash out on drinks and pub and restaurant visits. But retail sales data suggests consumers reined in spending over Christmas. Earlier this week closely watched purchasing managers' surveys pointed to fourth-quarter growth of around 0.1 per cent in Britain, according to data firm IHS Markit which compiles the surveys. Friday's data showed that Britain's services sector grew by 0.3 percent over the three months to November, while industrial output dropped by 0.8 per cent, the biggest decline since May 2017. Looking at November alone, industrial output dropped 1.5 per cent on the year - the biggest fall since August 2013. Separate figures showed Britain's goods trade deficit widened unexpectedly in November to 12.0 billion pounds from 11.9 billion pounds, worsened by the highest oil imports since September 2014.

UK economic growth hits six-month low, manufacturing slides

Britain&#39;s new finance minister Philip Hammond today ruled out an emergency budget in response to economic turbulence triggered by the country&#39;s vote in favour of exiting the European Union. 
 
Hammond told media that a budget would not be submitted before the British autumn, adding that London&#39;s key financial sector must retain access to the EU single market following Brexit. 
 
Ahead of last month&#39;s EU referendum, Hammond&#39;s predecessor George Osborne suggested that an emergency budget would be required in the event of a Brexit vote because of the risk of recession. 
 
However, he quickly ruled out such an event despite the country voting on June 23 to quit the bloc - and has now quit the government following Hammond&#39;s appointment. 
 
New Prime Minister Theresa May on Wednesday appointed Hammond to replace Osborne as chancellor of the exchequer. 
 
Osborne was the architect of the past six years of British austerity and a close friend of former prime minister David Cameron, while both had campaigned for Britain to remain in the EU. 
 
Hammond, who had been foreign minister in the outgoing government of Cameron, told various media outlets today that there would be no emergency budget. 
 
May &quot;made clear we will do an Autumn Statement (budget) in the usual way, in the autumn, and we will look carefully over the summer at the situation&quot;, Hammond told Sky News. 
 
Speaking to the ITV channel, he said that financial markets &quot;need to know we will do whatever is necessary to keep the economy on track&quot;. 
 
Bank of England meeting 
 
Hammond added that he was meeting today with Bank of England (BoE) governor Mark Carney to assess Britain&#39;s economy. 
 
It comes as the BoE prepares to announce whether it will cut its main interest rate to a new record low level under 0.50 per cent to curb the economic fallout from Brexit. 
 
Following the referendum the pound slumped to a 31-year-low against the dollar, before rebounding slightly. While a weak pound helps exporters, it makes imports more expensive, which in turn can push up inflation. 
 
But while a cut to the BoE&#39;s interest rate may help to boost business investment, it risks further weakening the pound according to analysts. 
 
&quot;There has been a chilling effect,&quot; on markets since the referendum, Hammond told BBC radio today. 
 
&quot;We have seen business investment decisions being paused because businesses now want to take stock, want to understand how we will take forward our renegotiation with the EU.&quot; 
 
Businesses &quot;want to know on what terms they will be able to sell into the single market of the European Union once Britain is outside that Union&quot;, he told the BBC. 
 
Hammond added that during Brexit negotiations with the EU, the government needed &quot;to ensure access to the European Union single market&quot; for London&#39;s financial services. 
 
&quot;It&#39;s not only in London&#39;s interest, it&#39;s in the interest of the EU as well. London provides a crucial financial service,&quot; he added. 
 
Osborne had said following the referendum result that he would seek to slash corporation tax over fears of an exodus of companies from Britain. 
 
Hammond though would not be drawn on Thursday on Osborne&#39;s pledge to cut Britain&#39;s levy on company profits to under 15 per cent from 20 per cent currently. 
 
Following the referendum, Osborne also scrapped the government&#39;s promise for a budget surplus by 2020. 
 
Hammond told the BBC on today that the Conservative government had &quot;to reduce the deficit further, but looking at how and when and at what pace we do that and how we measure our progress in doing that, is something that we now need to consider in light of the new circumstances that the economy is facing.&quot; 
 
(AFP)

'We will do whatever is necessary to keep the economy on track,' Philip Hammond said

Britain's new finance minister Philip Hammond today ruled out an emergency budget in response to economic turbulence triggered by the country's vote in favour of exiting the European Union. Hammond told media that a budget would not be submitted before the British autumn, adding that London's key financial sector must retain access to the EU single market following Brexit. Ahead of last month's EU referendum, Hammond's predecessor George Osborne suggested that an emergency budget would be required in the event of a Brexit vote because of the risk of recession. However, he quickly ruled out such an event despite the country voting on June 23 to quit the bloc - and has now quit the government following Hammond's appointment. New Prime Minister Theresa May on Wednesday appointed Hammond to replace Osborne as chancellor of the exchequer. Osborne was the architect of the past six years of British austerity and a close friend of former prime minister David Cameron, while both had campaigned for Britain to remain in the EU. Hammond, who had been foreign minister in the outgoing government of Cameron, told various media outlets today that there would be no emergency budget. May "made clear we will do an Autumn Statement (budget) in the usual way, in the autumn, and we will look carefully over the summer at the situation", Hammond told Sky News. Speaking to the ITV channel, he said that financial markets "need to know we will do whatever is necessary to keep the economy on track". Bank of England meeting Hammond added that he was meeting today with Bank of England (BoE) governor Mark Carney to assess Britain's economy. It comes as the BoE prepares to announce whether it will cut its main interest rate to a new record low level under 0.50 per cent to curb the economic fallout from Brexit. Following the referendum the pound slumped to a 31-year-low against the dollar, before rebounding slightly. While a weak pound helps exporters, it makes imports more expensive, which in turn can push up inflation. But while a cut to the BoE's interest rate may help to boost business investment, it risks further weakening the pound according to analysts. "There has been a chilling effect," on markets since the referendum, Hammond told BBC radio today. "We have seen business investment decisions being paused because businesses now want to take stock, want to understand how we will take forward our renegotiation with the EU." Businesses "want to know on what terms they will be able to sell into the single market of the European Union once Britain is outside that Union", he told the BBC. Hammond added that during Brexit negotiations with the EU, the government needed "to ensure access to the European Union single market" for London's financial services. "It's not only in London's interest, it's in the interest of the EU as well. London provides a crucial financial service," he added. Osborne had said following the referendum result that he would seek to slash corporation tax over fears of an exodus of companies from Britain. Hammond though would not be drawn on Thursday on Osborne's pledge to cut Britain's levy on company profits to under 15 per cent from 20 per cent currently. Following the referendum, Osborne also scrapped the government's promise for a budget surplus by 2020. Hammond told the BBC on today that the Conservative government had "to reduce the deficit further, but looking at how and when and at what pace we do that and how we measure our progress in doing that, is something that we now need to consider in light of the new circumstances that the economy is facing." (AFP)

British finance minister rules out emergency budget

The IMF has warned Brexit could deal the British economy a &quot;negative and substantial&quot; blow as Vladimir Putin suggested David Cameron was trying to &quot;blackmail&quot; Europe with the EU referendum. 
 
Meanwhile The Times newspaper came out&nbsp;Saturday&nbsp;in favour of Britain staying in the European Union, five days ahead of the vote on whether the UK should stay in the bloc or leave. 
 
The pound rallied as investors leaned towards a Remain outcome from&nbsp;Thursday&#39;s&nbsp;closely-contested referendum. 
 
IMF warns of contagion&nbsp; 
 
With less than a week until the referendum, the International Monetary Fund warned that a so-called Brexit would harm the British economy while &quot;contagion effects&quot; could hit markets worldwide. 
 
In the worst-case scenario, the UK economy would sink into recession next year and overall economic output would be 5.6 per cent lower than otherwise forecast by 2019, with unemployment rising back above six per cent, it said today. 
 
&quot;While there is much uncertainty about the precise economic effects of an exit from the EU, they are likely negative and substantial,&quot; the Washington-based global crisis lender revealed in its annual British economic check-up. 
 
&quot;An exit would precipitate a protracted period of heightened uncertainty that could weigh on confidence and investment and increase financial market volatility.&quot; 
 
In addition, &quot;contagion effects could result in spillovers to regional and global markets, although the primary impact would be felt domestically&quot;. 
 
While in a &quot;limited impact&quot; scenario the IMF said the economy would only lose 1.4 per cent from the current outlook by 2019, the report gave one of the starkest pictures yet of the impact of Brexit. 
 
Putin wades in&nbsp; 
 
Meanwhile Russian President Vladimir Putin suggested British Prime Minister David Cameron had called the referendum to &quot;blackmail&quot; and &quot;scare&quot; Europe. 
 
&quot;Why has he set up this referendum? To blackmail Europe? Or to scare it? What is the purpose if he himself is against Britain leaving the EU,&quot; Putin said today during a meeting with representatives of news agencies. 
 
&quot;Some experts say a Brexit will be to the detriment of Europe. But others say that the EU will be more stable,&quot; Putin said, pointing to the example of British fishermen. 
 
&quot;They explain how hard it is to live with the restrictions on fishing. But there are advantages in other sectors.&nbsp;If you consider all these things, it&#39;s very complicated to choose,&quot; he added. 
 
The What UK Thinks average of the last six opinion polls puts the Remain camp on 52 per cent to 48 per cent for the Leave campaign, excluding undecided voters. 
 
Times&#39; &#39;pragmatic&#39; Remain case 
&nbsp; 
The Times swung behind the Remain camp&nbsp;on Saturday, in opposition to its stablemate The Sun, Britain&#39;s biggest-selling newspaper, which is backing a Leave vote. 
 
&quot;The best outcome of next week&#39;s referendum would be a new alliance of sovereign EU nations dedicated to free trade and reform, led by Britain,&quot; it said in a 2,000-word editorial. 
 
The Times said voting to stay was a &quot;pragmatic rather than enthusiastic choice&quot;. 
 
&quot;Brexit is unquestionably economically riskier than a vote to remain,&quot; the daily said. 
 
&quot;On balance we believe Britain would be better off leading a renewed drive for reform within the EU rather than starting afresh outside it.&quot; 
 
The pound rallied&nbsp;Friday&nbsp;as investors swung their bets towards Britain voting to stay in the EU, in part due to the three-day suspension of campaigning over Cox&#39;s murder. 
 
&quot;The shocking news was seen, at least on the margin, as hurting public sentiment toward the Brexit move,&quot; said Omer Esiner of Commonwealth Foreign Exchange. 
 
Long-running fears of a pro-Brexit vote had been hammering the pound, and they were heightened in recent weeks as the &quot;Leave&quot; campaign pulled ahead in the polls. 
 
The pound surged about one per cent against the dollar to $1.4348. It was up 0.5 per cent against the euro at 78.62 pence. 
 
Meanwhile French National Front leader Marine Le Pen, enthused by the British referendum, addressed a 2,000-strong Vienna rally of far-right European &quot;patriots&quot;. 
 
The elites of Europe &quot;are scared that the United Kingdom is regaining its liberty, its freedom to trade with whom it pleases,&quot; she said. 
(AFP)

'While there is much uncertainty about the precise economic effects of an exit from the EU, they are likely negative and substantial'

The IMF has warned Brexit could deal the British economy a "negative and substantial" blow as Vladimir Putin suggested David Cameron was trying to "blackmail" Europe with the EU referendum. Meanwhile The Times newspaper came out Saturday in favour of Britain staying in the European Union, five days ahead of the vote on whether the UK should stay in the bloc or leave. The pound rallied as investors leaned towards a Remain outcome from Thursday's closely-contested referendum. IMF warns of contagion With less than a week until the referendum, the International Monetary Fund warned that a so-called Brexit would harm the British economy while "contagion effects" could hit markets worldwide. In the worst-case scenario, the UK economy would sink into recession next year and overall economic output would be 5.6 per cent lower than otherwise forecast by 2019, with unemployment rising back above six per cent, it said today. "While there is much uncertainty about the precise economic effects of an exit from the EU, they are likely negative and substantial," the Washington-based global crisis lender revealed in its annual British economic check-up. "An exit would precipitate a protracted period of heightened uncertainty that could weigh on confidence and investment and increase financial market volatility." In addition, "contagion effects could result in spillovers to regional and global markets, although the primary impact would be felt domestically". While in a "limited impact" scenario the IMF said the economy would only lose 1.4 per cent from the current outlook by 2019, the report gave one of the starkest pictures yet of the impact of Brexit. Putin wades in Meanwhile Russian President Vladimir Putin suggested British Prime Minister David Cameron had called the referendum to "blackmail" and "scare" Europe. "Why has he set up this referendum? To blackmail Europe? Or to scare it? What is the purpose if he himself is against Britain leaving the EU," Putin said today during a meeting with representatives of news agencies. "Some experts say a Brexit will be to the detriment of Europe. But others say that the EU will be more stable," Putin said, pointing to the example of British fishermen. "They explain how hard it is to live with the restrictions on fishing. But there are advantages in other sectors. If you consider all these things, it's very complicated to choose," he added. The What UK Thinks average of the last six opinion polls puts the Remain camp on 52 per cent to 48 per cent for the Leave campaign, excluding undecided voters. Times' 'pragmatic' Remain case The Times swung behind the Remain camp on Saturday, in opposition to its stablemate The Sun, Britain's biggest-selling newspaper, which is backing a Leave vote. "The best outcome of next week's referendum would be a new alliance of sovereign EU nations dedicated to free trade and reform, led by Britain," it said in a 2,000-word editorial. The Times said voting to stay was a "pragmatic rather than enthusiastic choice". "Brexit is unquestionably economically riskier than a vote to remain," the daily said. "On balance we believe Britain would be better off leading a renewed drive for reform within the EU rather than starting afresh outside it." The pound rallied Friday as investors swung their bets towards Britain voting to stay in the EU, in part due to the three-day suspension of campaigning over Cox's murder. "The shocking news was seen, at least on the margin, as hurting public sentiment toward the Brexit move," said Omer Esiner of Commonwealth Foreign Exchange. Long-running fears of a pro-Brexit vote had been hammering the pound, and they were heightened in recent weeks as the "Leave" campaign pulled ahead in the polls. The pound surged about one per cent against the dollar to $1.4348. It was up 0.5 per cent against the euro at 78.62 pence. Meanwhile French National Front leader Marine Le Pen, enthused by the British referendum, addressed a 2,000-strong Vienna rally of far-right European "patriots". The elites of Europe "are scared that the United Kingdom is regaining its liberty, its freedom to trade with whom it pleases," she said. (AFP)

Brexit could harm British economy and hit markets worldwide, IMF warns

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