BDO calls on BoE to expand QE scheme
Accountancy and business advice firm BDO has warned that economic growth could grind to a halt at the start of 2011 and shrink in the second quarter.
BDO is therefore calling on the Bank of England to inject more money into the economy, via its quantitative easing (QE) scheme.
QE, also known as printing money, is a process whereby the Treasury injects funds into the financial system to ease pressure on banks by giving them extra capital
Last week, the Bank’s Monetary Policy Committee (MPC) elected to keep UK interest rates on hold at the historically low level of 0.5% and opted not to inject any more funds into the economy via the QE scheme.
The Bank embarked on its £200 billion QE programme in March 2009, when the economy was in the midst of its worst recession in more than five decades.
Policymakers, Adam Posen and Martin Weale, as well as the Institute of Directors (IoD), have all have recently suggested injecting more cash into the economy to boost growth.
The call from BDO comes after its Business Trends optimism index dipped to 91.6 in September, from 93.1 in August, a level not seen since the recession.
According to Peter Hemmington, partner at BDO, the Government should consider easing up on the planned spending cuts – designed to tackle the spiralling budget deficit.