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BCC calls for step up in quantitative easing

BCC calls for step up in quantitative easing

Category: Economy

Updated: 04/08/2009
First Published: 04/08/2009

MONEYFACTS ARCHIVE
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The Bank of England has been urged to step up the pace of quantitative easing, ahead of tomorrow's Monetary Policy Committee meeting.

The British Chambers of Commerce (BCC) has called for the size of the programme to be increased immediately beyond the £125 billion mark and the proportion of corporate paper purchased by the Bank raised, as it was clear the policy was not yet fully effective.

Last month, the Committee announced the programme would continue at the same level, following an injection of an additional £50 million in May, but would be reviewed at the next meeting.

However, banks have come under fire for their continuing reluctance to lend, with critics claiming it is sending good businesses to the wall. There are fears that recent signs of a recovery in the economy could be stunted by a lack of liquidity.

"The UK economy is now at a critical turning point and talk of recovery is premature," said David Kern, BCC chief economist.

"Despite some positive developments, we must not be lulled into a false sense of security. Although the recession is moderating, the MPC must act forcefully to counter the serious risk of a relapse.

"We continue to urge the MPC to increase the pace of QE, well beyond £125 billion, so as to improve access to finance for viable companies, and particularly small firms."

In tomorrow's meeting, the MPC is also expected to announce the Bank of England's base rate of interest is to remain at 0.5 per cent for the fifth consecutive month.

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