Business chiefs welcome decision to extend QE by £25 billion

Small businesses have welcomed news that the Bank of England will pump an additional £25 billion into the economy as part of its Quantitative Easing (QE) programme.

So far, the Bank has spent around £175 billion on QE. It will be the second time this year that the Bank’s rate-setters, the Monetary Policy Committee (MPC), have chosen to extend the programme.

Businesses were dealt a blow last month when it was revealed that the economy had contracted by 0.4%. It had been hoped that recent fiscal measures would help drive the UK out of recession, but a recovery has not yet materialised.

The British Chambers of Commerce (BCC) has welcomed the MPC’s response in extending the QE spend. However, it has stressed that further action will be necessary. David Kern, Chief Economist at the BCC, said:

“We are pleased with the decision to increase the QE programme to £200bn, but disappointed that the MPC has not taken more specific measures aimed at stimulating bank lending to companies.

“With the economy still declining in Q3, forceful policies are needed to end the recession as soon as possible. The current measures, though helpful, will have to be supplemented with additional steps, and QE will have to be increased further.”

The Bank of England also announced today that interest rates will be kept at 0.5% for an eighth consecutive month.