Bank Of England Under Pressure To Act

02 August 2012 18:00 - Lucy Williams

    



Bank Of England Under Pressure To Act

The weakening UK economy is putting pressure on the Bank of England to take action and change interest rates. The central bank has kept interest rates on hold despite warnings and advice that the faltering UK economy, which is currently in a double-dip recession, needs emergency support. The Bank of England has already extended quantitative easing to £375 billon but has decided against changing interest rates hoping that recent measures such as the extra QE and the upcoming ‘Funding for Lending’ scheme will be able to help the UK economy out of its recession.

It has been suggested that problems facing the Eurozone are now reaching the UK with the manufacturing sector showing the worst performance since 2009, put down to a 0.7 percent decline.  Slows in growth figures for the UK economy are worrying and as a result the Bank of England is being urged to act. A senior economist at Scotiabank stated that “the poor second quarter GDP data make it hard for the Bank of England not to loosen monetary policy further” while Anna Leach, an economic analyst at CBI said that “the funding for lending scheme is now up and running, which, alongside the current round of asset purchases, should provide some support to businesses”.

However it is clear that no matter how helpful these stimulus measures may be the UK economy will continue in its struggle. Leach added that “the outlook for the UK economy remains fragile, particularly in light of the disappointing official data for the first half of the year and the recent slowdown in global momentum”. 

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