The global slowdown has arrived on Britain’s doorstep.
Goods exports fell 9.2 percent in July, the most in nine years. The drop was broad based, with the U.S., Switzerland and China leading the decline outside the European Union. The bad news meant factory production declined on an annual basis for the first time in almost two years.
The figures suggest the risks to U.K. economic growth from Europe's struggle to strengthen and China's slowdown may be getting big enough to affect the outlook for Bank of England interest rates. While Governor Mark Carney said last month that rate path can withstand the volatility, Thursday's Monetary Policy Committee announcement will show whether the other eight members of the panel agree.
"Downside risks have risen very significantly," said David Tinsley, an economist at UBS in London. "This could prove a transitory phase but the possibility that it could become more protracted could tempt the committee to lean in a heavily dovish direction."
Data for British manufacturers may continue to soften: Markit Economics' manufacturing index fell in August as a strong pound and weakness in Europe sapped demand for exports.