"It has undertaken extensive contingency planning and is working closely with HM Treasury, other domestic authorities and overseas central banks. The Bank of England will take all necessary steps to meet its responsibilities for monetary and financial stability".
-Mark Carney, Bank of England
UK economy slowed in the first quarter, dragged down by weaker business investment and a growing trade deficit. Meanwhile, the current account deficit narrowed less than expected at the start of this year. According to the Office for National Statistics, the third estimate of the UK's first quarter GDP showed that the economy expanded 0.4% on a quarter base, unrevised from the previous forecast. The following data is in line with economists' forecasts. Moreover the annual GDP growth was also unrevised to 2%, pushing the UK economy to reach 7% above its pre-crisis peak in the three months from January to March.
However, business investment declined in the first quarter. Gross fixed capital investment plunged 0.1% during the first quarter, revised down from an earlier estimate of 0.5%. Meanwhile, several economists think that the PMI data for May suggests that the UK economic growth will decelerate further in Q2 to 0.2%. Financial markets have been in panic mode during the last few days as political infighting in Westminster, and uncertainty about Britain's future in Europe, have generated significant downward pressure on sentiment.
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