British economy gets £50 billion boost but more may be required, business leaders warn

The Bank of England has confirmed that an additional £50 billion will be allocated to its Quantitative Easing (QE) programme.

Quantitative Easing, a process which some economists refer to as ‘printing money’, sees Government bonds and assets bought up in a bid to boost economic activity. Many businesses were calling on the Government to extend the programme from its original £125 billion plan before the latest announcement was made.

Many feel the move reflects fears from the Bank of England that the state of the economy is perhaps worse than initially thought. While many small businesses have welcomed the move, others have been cautious over the process and have warned that another boost may be necessary in the future.

David Kern, Chief Economist of the British Chambers of Commerce (BCC), commented yesterday:

"We welcome the MPC’s decision to increase the QE programme to £175bn. This should be sufficient for the time being, but in view of the risks still facing the economy, more may be needed later in the year.

“Although QE has helped to prevent a worse downturn, it is not yet fully effective. Money supply is not growing at an adequate pace, bank lending to businesses has recorded outright declines in recent months, and many viable small firms are finding it difficult to access credit.”