02/10/11

Commenting on the choices facing the Monetary Policy Committee (MPC) at its October 2011 meeting next Thursday, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
 
“Worsening problems facing the Eurozone, and worrying signs that the domestic economy is slowing have increased threats to Britain’s fragile recovery. To reduce risks of a setback, we believe the MPC should act resolutely. The QE programme should be increased on Thursday from £200 billion to £250 billion, and the committee should consider more radical methods.
 
“The additional QE resources should be primarily used to purchase securitised SME loans and other private sector assets. In addition, the imposition of negative interest rates on deposits held by commercial banks at the Bank of England could help to boost the availability of credit. Furthermore, the MPC should bolster business confidence by confirming that interest rates will not be raised until the end of 2012, as the Fed has done in the US.
 
“While implementing some these ideas may cause technical problems for the MPC, these are not insurmountable. Even if success cannot be guaranteed, the MPC must be more proactive. We appreciate that the committee will be concerned by above-target inflation, but the threats to growth are more serious at the present time.”

Ends

Notes to editors:

The British Chambers of Commerce (BCC) is the national voice of local business.

The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce, serving over 100,000 businesses across the UK, which employ over five million people.

Media contacts:

Liz Larvin
Tel: 020 7654 5813 / 07825746812
Email: l.larvin@britishchambers.org.uk

Lisa Morrison
Tel: 020 7654 5812 / 07717682221
Email: l.morrison@britishchambers.org.uk