Uncertainty surrounding Brexit pushed the Bank of England to lower its economic growth forecast for the UK in 2019 to just 1.2%, which would mark the country's slowest growth since the financial crisis.
"The fog of Brexit is causing short term volatility in economic data, and more fundamentally is creating a series of tensions in the economy," Bank of England Governor Mark Carney said at a press conference.
"Although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a no deal, no transition exit."
The bank's Quarterly Inflation report, released on Thursday, warned that Brexit was having a clear negative impact on the UK economy, saying that since the last Inflation Report, in November: "The further intensification of Brexit uncertainties, coupled with the slowing global economy, had weighed on the near-term outlook for UK growth."
"Business investment had fallen for each of the past three quarters and was likely to remain weak in the near term. The housing market had remained subdued. Indicators of household consumption had generally been more resilient, although retail spending could be slowing."
Alongside the dire warnings about UK growth, the central bank's nine-member Monetary Policy Committee (MPC) voted unanimously to leave rates at 0.75%. Any outcome other than no change from the meeting would have been a significant surprise.
Rates are likely to increase further in the coming years, but the timing of any rate hikes remains unclear, particularly with the looming spectre of a possible no deal Brexit hanging over the UK.
The bank previously warned in November that the worst-case scenario of a no deal Brexit would be the UK plunging into its deepest recession since World War II, and knock 8% off GDP in a single year.
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