• The MPC must help to boost lending to business

 Commenting on today’s Monetary Policy Committee (MPC) decision, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“UK businesses welcome the MPC's decision to increase the QE programme to £275 billion. In the face of the risks facing Britain’s recovery, it is important to make every effort to underpin business confidence and avoid a setback.  However, higher QE on its own is not enough, and we urge the MPC to look at other radical methods. The Chancellor’s intention to use credit easing methods to help stimulate the flow of credit in the economy is a welcome initiative, but its implementation will take time and the MPC is better placed to move more quickly.
“There is a strong case for the MPC to help boost bank lending to businesses by immediately raising its purchases of private sector assets. For QE to be truly effective, it is critical that the additional funds should urgently go into the real economy. The Committee should also impose negative interest rates on deposits held by commercial banks at the Bank of England, which could help to boost the availability of credit.

"By confirming that interest rates will not be raised until the end of 2012, as the Fed has done in the US, the MPC can help to underpin business confidence. We appreciate that the MPC must be concerned over above-target inflation, but this is likely to fall next year, while the threats to growth are more serious at the present time.”


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