Businesses question more quantitative easing

Business leaders last night reiterated their argument that more quantitative (QE) easing would “only provide marginal benefits” for the UK economy.

The statement from the British Chambers of Commerce (BCC) came ahead of today’s decision by the Bank of England’s monetary policy committee. It is widely expected to freeze interest rates at 0.5 per cent and hold its programme of QE at £375 billion.

Many analysts believe the Bank will increase QE in November, after the last £50bn round announced in July is completed.

However, David Kern, chief economist at the BCC, said: “QE played a valuable role in the early stages of the financial crisis in 2009. But, with yields on gilts at very low levels already, more QE would only provide marginal benefits for the real economy, while creating longer-term risks of bubbles, financial distortions and higher inflation.”