UK - Sub-Zero Interest Rate for First Time

Arno Froese

The Bank of England indicated that it could cut interest rates below zero for the first time in its 326-year history as it tries to shore up a U.K. economic recovery that is facing the dual headwinds of the coronavirus and Brexit.

In minutes accompanying the decision, the rate-setters said a recent wave of virus infections has “the potential to weigh further on economic activity, albeit probably on a lesser scale than seen earlier in the year.”

One clear concern relates to whether Britain, like others in Europe, will reimpose broad restrictions on businesses and public life after the recent flare-up in virus infections across the region. Already social gatherings are being restricted and certain areas of the U.K. are seeing localized lockdowns.

The British economy suffered one of the deepest recessions in the world this year when many sectors were effectively mothballed to help contain the pandemic.

The other major risk facing the U.K. economy relates to the post-Brexit trade discussions between the U.K. and the EU following a worsening in relations. If the talks collapse, tariffs and other impediments to trade will be imposed by both sides at the start of 2021, a development that would hurt the U.K. more.

The U.K. left the EU on Jan. 31, but is in a transition period that effectively sees it benefit from the bloc’s tariff-free trade until the end of the year while the future relationship is negotiated.

With the outlook so murky, the bank was not expected to provide more stimulus. Since the pandemic started, it has cut its main rate to a record low and boosted its bond-buying program to oil the financial market’s wheels and keep borrowing affordable., 17 September 2020

Arno's commentary

Before 1973, when the UK was admitted into the predecessor of the EU, the GDP per head was well below the six major EU countries. By 2010, Britain was leading the European growth scale. With Brexit, it will apparently suffer, since 44.7% of UK exports went to the EU, with 12.5% of exports going to European countries not members of the EU.

What lies in the future? Our understanding of Bible prophecy leads us to believe that, despite Brexit and the often diverse opinions within the EU, the end result will always be unity at any cost. We must keep in mind that the spirit of Antichrist, which dominates planet earth, will and must create a one-world order that will be extremely prosperous, peaceful, and secure—albeit temporary.

Arno Froese is the executive director of Midnight Call Ministries and editor-in-chief of the acclaimed prophetic magazines Midnight Call and News From Israel. He has authored a number of well-received books, and has sponsored many prophecy conferences in the U.S., Canada, and Israel. His extensive travels have contributed to his keen insight into Bible prophecy, as he sees it from an international perspective.

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