Business investment to remain 'very weak', Bank of England deputy governor warns
Business investment will be "very weak" in the near future and hinge upon how firms and households react to Brexit, according to the Bank of England deputy governor.
Sir Jon Cunliffe said business investment had flagged in the years after the financial crisis, averaging at 1.5% annually compared to 3% in the 40 years to 2007.
He also underscored the challenges facing Britain's lacklustre productivity, which has seen barely any output growth per hour since the crisis and was lower than other advanced economies.
In a speech for the Greater Birmingham Chamber of Commerce, Sir Jon, a member of the Bank's Monetary Policy Committee (MPC), said: "B usiness investment is expected to remain very weak before picking up.
"Ultimately, the outlook for business investment, like the outlook for the economy more generally over the forecast period, depends largely on how households and businesses react to Brexit and on the process that accompanies it."
The Bank of England hiked its economic forecasts last week as it cast a more positive outlook for the UK economy.
In its quarterly inflation report, the Bank upped its growth forecast to 2% this year, 1.6% in 2018 and 1.7% in 2019.
It came as minutes of the latest MPC decision showed policymakers had voted unanimously to keep rates on hold at 0.25%.