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Bank pumps extra £25bn into economy
06.11.09
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Rate-setters have elected to pump an extra £25 billion into the economy amid concerns over getting the UK's faltering recovery out of recession.
The Bank of England voted to boost its quantitative easing (QE) programme, which is aimed at increasing the money supply and helping the economy, bringing planned spending to a total of £200 billion.
At the end of a two-day meeting, the Monetary Policy Committee (MPC) also chose to keep interest rates at their record low of 0.5%.
The decision will partly appease economists who had called for a hike of up to £50 billion in QE in the wake of disappointing UK figures.
Pressure for steep acceleration of the programme was sparked after a surprise 0.4% decline in the economy between July and September, indicating the UK remained mired in recession, despite news that other countries were beginning to shrug off their downturns.
Major world economies including the US, France and Germany have emerged from recession in recent months, leaving the UK behind and intensifying calls for further action from officials.
Figures showing a 0.9% decline in the Bank's preferred measure of money growth in September also raised uncertainty over whether the current level of QE was sufficient.
In a statement the Bank said: "Households have reduced their spending substantially and business investment has fallen especially sharply. GDP continued to fall in the third quarter."
It said there had been a number of indicators on spending and confidence that suggested the UK would see economic activity pick up soon.
"On balance, the committee believes that the prospect is for a slow recovery in the level of economic activity, so that a substantial margin of under-utilised resources persists," it added.
Reader views (1)
Joe Public please take careful note: Gormless Brown is borrowing £500,000,000.00 EVERY DAY (to be repaid in 2050)- that means that the children of today and their children will still be repaying this debt in 40 years' time.
The USA, France and Germany are well out of the recession.
China currently has 8% growth.
So much for Gormless Brown spouting that the UK "is well placed" to deal with the recession.
- Reuben Camara, Plot 1, Morecambe Compound, EUSSR
