BCC calls for more stimulus to withstand harsh cuts

| October 12, 2010 | 0 Comments

The British Chambers of Commerce (BCC) today echoed other reports and suggested the Bank of England needs 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.

Over recent days, leading business groups, as well as Bank of England policymakers, have argued that more money needs to be injected into the economy to withstand the impact of massive spending cuts and the forthcoming VAT rise.

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.

Meanwhile, the BCC’s latest quarterly economic survey said economic activity slowed significantly in the third quarter, another reason that the Bank should expand its QE scheme.

The BCC believes the economy grew by just 0.5% in the July to September period, if this proves to be true, it would be half the rate of growth recorded in the previous quarter.

In related news today, the British Retail Consortium (BRC) said retail sales growth eased in September.

The BRC said consumers are holding off purchasing big-ticket items as they prepare themselves for massive spending cuts, introduced by the Government to slash the budget deficit.

Also today, the Royal Institution of Chartered Surveyors (Rics) said 44% of its surveyors saw prices fall in the past three months. Just 6% reported a rise, while 50% said noted they had been stable.

The Rics said a fall in house prices is expected in the coming months.

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