Bank of England cuts UK growth forecast and warns over no-deal Brexit

The Bank of England has cut its forecasts for UK growth over the next two years and also warned that a no-deal Brexit would hit the economy and trigger a further drop in the value of the pound.

The Bank left interest rates unchanged at 0.75% against a backdrop of weaker global growth and ongoing trade tensions between the US and China.

It said the UK economy was expected to grow by 1.3% this year, down from a previous projection of 1.5% in May.

The Bank also cut its outlook for growth in 2020 to 1.3%, from a previous projection of 1.6%.

The forecasts are based on the assumption that the UK leaves the EU with a Brexit deal – however it suggested growth could be much slower in the event of no deal.

Why has the Bank cut its forecasts?

The Bank’s Monetary Policy Committee (MPC) that sets interest rates said the UK was likely to have stagnated in the three months to June.

Its quarterly Inflation Report predicted only modest growth in the coming months due to ongoing uncertainty over the UK’s future relationship with the European Union.

It said there was a one-in-three chance that the economy will shrink at the start of next year, with global trade tensions also weighing on the UK outlook.

And it said there had been a “material and broad-based slowdown” in world growth since the end of 2017.

How is Brexit affecting business?

The Bank said UK economic growth was “likely to remain subdued over the coming year, with Brexit-related uncertainties weighing on spending to a greater extent than in May”.

Its latest survey of businesses showed that 90% of them had implemented contingency plans ahead of a previous March Brexit deadline.

Three quarters of respondents said they were also “as ready as they can be” for a no-deal scenario.

However, the Bank warned that “material risks of economic disruption remain”.

It noted that 240,000 businesses that currently trade solely with the EU were not ready for sudden EU border inspections in the event of no deal.

Many others did not have the right documents to keep selling to the EU if the UK left the bloc without a deal.

Primark demands landlords give them 30% rent cuts for not using CVAs

Primark is demanding that landlords cut its shop rents by 30 per cent after struggling high street chains used insolvency tools to slash theirs.

New Look, the Topshop owner Arcadia and Monsoon used company voluntary arrangements (CVAs) to close stores and reduce their bills.

CVAs have doubled in the past two years as bricks and mortar retailers have been caught out by the rise of online shopping. The CBI reported that retailers had recorded the longest period of falling sales for eight years.

Primark, which has so far resisted launching an online store, has 189 shops in the UK and made £7 billion of sales last year. In return for rent reductions, the discount fast-fashion retailer has been offering landlords lease extensions or an investment in store refurbishment. “We have a duty to our shareholders to maintain a competitive cost base,” Primark told The Sunday Times.

Its demand will add to the woes of Britain’s listed property companies, including Intu and Hammerson, which are facing investor scrutiny about the inflated values of shopping centres.

Next has secured average rent reductions of 29 per cent. WH Smith is paying no rent on a handful of stores while Julian Dunkerton, co-founder of Superdry, warned that if landlords did not agree to rent cuts he would shut shops. Hotel Chocolat’s founder, Angus Thirlwell, said “arrogant and dominant property owners” were now being forced to be more supportive of retailers.

Nissan plans to cut 10,000 jobs as for Sunderland workers fear for jobs

Eight thousand Nissan workers in the UK are anxiously awaiting news as to where big cuts by the Japanese car manufacturer will fall.

Before the company’s half-year earnings figures, which are expected to be published tomorrow, reports out of Tokyo indicate that Nissan could call for 10,000 redundancies worldwide, double the 4,800 cuts the manufacturer had previously indicated. The news is expected to come overnight.

Nissan — Japan’s second largest automotive group, behind Toyota — is one of the UK’s largest automotive employers alongside Jaguar Land Rover and BMW, which builds Minis and Rolls-Royces in the country, and Ford, which assembles car and van engines.

The UK is Nissan’s main European base, employing 7,000 people at its sprawling manufacturing facilities in Sunderland, where it assembles nearly 500,000 vehicles a year, most notably the best-selling Qashqai model. There are another 1,000 employees working for its sales and marketing operations headquartered in Maple Cross, Hertfordshire, as well as at its engineering and research technical centre at Cranfield, Bedfordshire, and its design studio, the birthplace of the Qashqai, in Paddington, London.

A spokesman for Nissan declined to comment on the reports, saying: “We have made no announcement.”

The future of Nissan in Sunderland has been a political hot potato ever since Theresa May cut a secret deal with Nissan’s boss at the time, Carlos Ghosn, giving assurances of support for the plant during the uncertainties of Brexit. That, however, did not prevent Nissan from pulling plans to bring its X-Trail 4×4 model to the Sunderland assembly lines.

The reports out of Tokyo indicated that the focus of the job cuts may be in the Americas. Its South American plants are seen to be of low profitability while the carmaker has also been reporting weak sales in the United States.

The job cuts come against a backdrop of crisis at the auto giant. It lost its charismatic leader and saviour, Mr Ghosn, amid allegations of financial wrongdoing at the turn of the year. That destabilised its cross-shareholding alliance with Renault, the French carmaker. It has long been argued, most notably by Emmanuel Macron when he was the French economics minister, that more Nissan models should be manufactured at Renault’s under-utilised plants in France.

Nissan’s financial performance has not been good. Global sales fell last year by 4.4 per cent to 5.5 million. That included a 9 per cent fall in the US and a near-15 per cent fall in Europe, where there has been a backlash against diesel vehicles, directly impacting the Nissan Qashqai. In the first three months of the year, Nissan’s earnings fell to a nine-year low with a warning of worse to come.