£50bn more QE now would give shock boost to Britain, says business group

Tim Wallace
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PRINTING more money would boost the economy just when a stimulus is most needed, the British Chambers of Commerce (BCC) argued yesterday, calling on the Bank of England’s Monetary Policy Committee (MPC) to announce more quantitative easing (QE) at Thursday’s meeting.

Low economic growth and further fiscal austerity mean monetary policy is the most important tool left to help the recovery, the business group said.

“UK monetary policy must be as expansionary as possible to protect our economy from adverse effects of deficit cuts and Eurozone problems,” said BCC chief economist David Kern.

“There is a strong case for the MPC to announce a further £50bn increase in the QE programme this week, to £325bn.”

Other economists disagree.

“The message from the MPC seems to be that more QE is highly probable, but not until the New Year,” said IHS Global Insight’s Howard Archer.

Nonetheless, the BCC believes a surprise move would maximise impact.

“An early announcement would strengthen confidence and help counter the negative mood that has become apparent following the grim projections from the Office for Budget Responsibility,” Kern continued.

The BCC is also calling on the MPC to purchase private sector assets, and for George Osborne to accelerate the implementation of credit easing, which aims to help SMEs borrow.