• Finder.com has panelled prominent economists who’ve shared their forecasts ahead of the Bank of England’s Base rate announcement on September 13, 2018
• All eight economists predict the rate to hold at 0.75% on Thursday, and for the remainder of the year
• All economists think Brexit will negatively affect the UK economy in the medium term, although some think a soft Brexit could create a positive outlook
• Four of the eight economists (50%) have a positive outlook towards the cost of living over the next six months
• The survey also found that 37.5% (three of the eight economists) hold a negative outlook for the next six months when it comes to employment

10 September, 2018, LONDON – Personal finance comparison site finder.com has panelled some of the country’s brightest economists on what the Bank of England will decide at the next Monetary Policy Committee (MPC) meeting on September 13, 2018.

Finder’s Bank of England Bank Rate Survey has found that all eight economists unanimously predict the bank rate will hold at 0.75% at the next meeting. The survey also found that 100% of economists predict the rate to hold for the remainder of 2018.

Two of the main reasons for the panellists’ forecasts is political uncertainty and Brexit negotiations.

Sanjay Raja, UK economist at Deutsche Bank, said, “We expect the BoE to hold in September, and indeed for the remainder of the year, given heightened Brexit uncertainty. Furthermore, given the recent narrative by MPC members we see limited ability for the Bank to push through another rate hike over the remainder of the year.”

Impact of Brexit negotiations

When asked for their thoughts on Brexit negotiations, all economists predict the negotiations will have a negative effect on the UK economy in the medium term. However, some of the economists foresee a neutral to positive outlook, should the government achieve a soft Brexit.

Alan Bridle, UK economist at Bank of Ireland, said Brexit will be “Disruptive and Negative in the short-term but neutral and potentially positive in the medium to longer term if the government adopts the correct policy “mix” on skills, infrastructure, exporting and a modern industrial strategy to drive a significant uplift in the UK’s productivity performance.”

Six month economic outlook

The economists were asked to share their outlook on five economic indicators over the next six months: wage growth, employment, cost of living, household debt and housing affordability.

Out of these indicators, the cost of living saw the most positive outlook, with four of the eight economists (50%) expecting a positive outlook for the next six months. It was followed by wage growth and housing affordability (both at 37.5% respectively).

The most negative outlook was around employment, as three of the eight (37.5%) economists are pessimistic about this over the next six months. The prospects for household debt are also negative according to two (25%) economists, with none of the remaining experts predicting a positive outlook for this in the short term.

Monetary Policy Committee: Dovish or Hawkish?

When asked whether the MPC should generally be dovish or hawkish over the next 12-24 months, the majority of our panellists predict the committee will take a cautious policy stance over the next year. However, some panellists predict a smooth Brexit transition could mean a more hawkish stance in future.

Chris Williamson, Chief Economist at IHS Markit, said, “A dovish policy stance (one hike per year) looks likely for the next year as Brexit uncertainty is dampening growth at the same time that global economic conditions are showing signs of cooling. However, a smooth Brexit transition process could mean the MPC turns more hawkish.”

Commenting on the survey, Jon Ostler, UK CEO at finder.com said: “As the MPC prepare to meet again on Thursday, consumers are still yet to truly experience the benefits of the interest rate rise they introduced in August. It is very unfair that most of the high street banks, and over half of mortgage lenders, have dumped the interest rises on their mortgage customers, while hardly any have passed on the higher rates to customers with savings accounts. Banks can’t have any complaints if customers switch to better savings accounts if this situation doesn’t change soon.

“For this upcoming decision, the Committee has indicated they’re in no rush to raise the interest rates again, so our panellists’ predictions come as no surprise. Many of them think that Brexit may be the biggest determiner of when the next movement will be, although they all agree that this isn’t likely to come in 2018. While a ‘soft Brexit’ is far from guaranteed to happen, it is encouraging that some of our panelists believe this wouldn’t harm Britain’s long term economic outlook, and could actually boost it.”

The full report, complete with data tables and embeddable infographics is available here.