Cable: economy needs quantitative easing boost

| July 25, 2011 | 0 Comments
Cable: economy needs quantitative easing boost

The sluggish performance of the UK economy needs combating with another round of Quantitative Easing (QE), according to Business Secretary, Vince Cable.

In an interview with The Financial Times, the minister identifies weak demand as a serious block to growth and urges the Bank of England to resume its QE programme, which was suspended early last year.

The Bank has so far spent £200 billion buying up bank assets, such as government and corporate bonds, in efforts to ease lending and boost growth, and at the risk of devaluing sterling.

However, some analysts maintain the programme never went far enough, with the Centre for Economics and Business Research recommending a further £100 billion of QE, and the Institute of Directors an additional £50 billion.

Last week, Ernst & Young ITEM Club lowered its growth forecast for the UK economy after warning that the country is at a “critical juncture”.

The forecaster is expecting economic growth of 1.4% this year, compared with an earlier estimate of 1.8%.

Official second-quarter figures will be out this week.

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