MPC should help boost lending to business to avoid double-dip recession
07/01/10 | 17:21
Commenting on the choices facing the MPC today, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“Although we do not expect the MPC to announce policy changes at today’s meeting, the Committee must consider measures aimed at helping the UK to start a sustainable recovery without delay.
“Given the need to maintain Britain’s international credit rating, it would be too risky to increase the QE stimulus beyond £200bn. However, the MPC must make more determined efforts to remedy the persistent weakness in bank lending to businesses. The problems facing credit-worthy small and mid-sized firms, trying to obtain adequate finance remains a major obstacle delaying Britain’s exit from recession.
“While solving this problem requires the Government to become involved, the MPC could make a significant contribution by imposing a negative interest rate on deposits held by commercial banks at the Bank of England, to discourage the hoarding of cash while providing an incentive to lend to viable businesses.”
Ends
Media Contact:
Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk
Notes to Editors:
At the December MPC meeting interest rates were held at 0.5% and the Quantitative Easing programme was left unchanged at £200bn.
At the November MPC meeting the QE programme was increased to £200bn.
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 business across the UK, which employ over five million people