Bank of England under pressure over UK liquidity

Following the successful implementation of the Bank of England‘s quantitative easing policy, there are fresh calls that the programme, which finished in March 2010, should now be extended for a further 6-9 months.

According to new research from the Institute of Directors, there is still a general lack of liquidity in the UK economy and unless new measures are taken to sure up the availability of finance,  the economic recovery could be halted.

The IoD believe that an additional cash injection of between £45-£55b is now required, even though the first tranche of quantitative easing raised more than £200b before closing earlier this year. A spokesperson from the IoD, which represents more than 50,000 members from the business community, said that the money was badly needed in the wake of the latest economic indicators.

Graeme Leach, the IoD’s lead economist, further added that monetary action is needed now, before the onset of the public sector recession. According to Leach, although inflation is exceeding it’s original targets set by the Bank of England, a double-dip recession is a possibility unless people are encouraged to spend again.

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