Bank of England raises UK’s growth forecast for next year

Adidas to profit as it sheds jobs at Reebok

THE Bank of England yesterday hiked its economic growth forecast for next year, as it froze its key interest rate at a record-low 0.25 percent and left stimulus unchanged.

The BoE, revealing its quarterly outlook alongside the rate decision, raised its prediction for this year’s growth and lifted its 2017 forecast, but downgraded 2018 GDP guidance.

Governor Mark Carney meanwhile warned that yesterday’s High Court decision to order a parliamentary vote on Brexit was part of the “uncertainty” arising from Britain’s shock EU exit referendum result in June.

“It’s an example of the uncertainty that will characterise this [Brexit] process,” Governor Mark Carney said.

“That uncertainty does bear down on business ment,” he warned.

The economy was predicted to grow by 2.2 percent this year, by 1.4 percent in 2017 and by 1.5 percent in 2018.

That compared with previous GDP expansion forecasts of 2 percent, 0.8 percent and 1.7 percent respectively.

“In the three months since [August], indicators of activity and business sentiment have recovered from their lows immediately following the referendum and the preliminary estimate of GDP growth in the third quarter was above expectations,” the central bank noted in a statement.

“These data suggest that the near-term outlook for activity is stronger than expected three months ago.”

It added that household spending had grown faster than expected in August, while the housing market had been more resilient.

The announcement came two hours after a ruling that parliament, not the government, must approve the start of Britain’s withdrawal from the European Union, in a landmark decision that could delay Brexit.

Three senior judges ruled that Prime Minister Theresa May did not have the right to use her executive power to trigger Article 50 of the EU’s Lisbon treaty, which begins a two-year countdown to leaving the bloc.

The pound advanced further against rival currencies on the invest- BoE decision, having earlier jumped through $1.24 in the wake of the High Court ruling.

Sterling has tumbled to multi-year low points against its main rivals since Britain voted June 23 for Brexit.

The court ruling has “made triggering Brexit a lot trickier and has given sterling a massive shot in the arm”, said Neil Wilson, analyst at ETX Capital.

“The news sent the pound roaring through $1.24 before gains were pared as markets digest the news – the fact is no one really knows what the implications of this decision are yet.”

The BoE slashed its main interest rate to the current level in August, as part of a postreferendum stimulus package worth up to £170 billion ($212 billion) as Carney warned of recession risks.

“The upshot is that the stronger outlook for the economy than previously anticipated means that another rate cut now looks unlikely,” said Capital Economics analyst Paul Hollingsworth.

“Indeed, we think that the economy will continue to surprise on the upside over the next few years and, as such, we think that the next move in interest rates will be up.”

Yesterday’s unanimous rate decision – which was expected by markets – was unveiled after Carney put an end to speculation over his future by announcing he would extend his contract for one year to 2019 to aid an “orderly transition” to Brexit. Britain’s economy grew by a better-than-expected 0.5 percent in the three months following the Brexit vote. GERMAN sportswear group Adidas reported a jump in profits yesterday, lifted by strong sales of its own-brand trainers and apparel, but said a planned overhaul of its struggling Reebok unit would cost 150 jobs.

The Adidas group confirmed its improved outlook for the year, bolstered by high-profile sponsorships during the Euro 2016 football tournament and the Rio Olympics, as well as collaborations with big names like Kanye West.

New chief executive Karsten Rorsted, who took the helm on October 1, said: “2016 will be a record year for the Adidas group with truly exceptional results.”

For the July to September period, the group’s net profit soared by 24 percent compared to the same period a year earlier to 386 million ($428 million).

Group revenues grew by 14 percent to 5.4 billion.

The Adidas brand itself, famed for its three-striped logo, saw global sales jump 20 percent, driven by strong demand for its retro-inspired adidas Originals trainers and its adidas neo urban fashion line.

But there was less good news for the group’s Reebok brand, which saw its sales climb by just seven percent.

Adidas bought the US fitnesswear specialists in 2005 in a bid to narrow the gap with its main rival Nike, but Reebok has struggled to impress at the group and Rorsted said it would now be restructured.