07/03/12

Commenting ahead of the MPC decision tomorrow (Thursday), David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

“The financial markets are almost unanimous in expecting no change at the MPC meeting, with interest rates staying at 0.5% and the Quantitative Easing (QE) programme at £325bn. Following last month’s increase in QE, there is clearly no case for any new moves in March.

“We supported the increase in QE as it will help to underpin financial stability. However, we are concerned that it has not led to meaningful increases in lending to businesses, and the benefits to the real economy have been limited. Despite the increase, mortgage rates have risen in recent days, which is clearly a problem. We urge the Chancellor to address these issues as soon as possible by introducing an effective credit-easing scheme.
 
“But the MPC also needs to play its part, and should consider including assets other than gilts, such as securitised SME loans and mortgages, in the QE programme. There are also lessons to be learned from the European Central Bank’s recent success in providing large amounts of longer-term cheap money to banks. Similar measures in the UK could make banks less risk averse, and may help to stimulate the flow of lending to viable businesses.”

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. For more information visit: http://www.britishchambers.org.uk/

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