September 27, 2011

BCC urges fresh round of QE

by Kay Mitchell

The British Chambers of Commerce (BCC) is calling for a fresh round of quantitative easing (QE) – a scheme designed to stimulate growth within the economy.

The leading business group has written to Chancellor George Osborne to ask him to consider the option when he delivers his autumn statement later this year.

At the Bank of England’s rate-setting meeting, earlier this month, it was revealed that one of the Monetary Policy Committee (MPC) members, Adam Posen, again, called for an injection of £50 billion via the QE scheme to boost growth

Mr Posen has called for the QE scheme to be re-introduced since October 2010 but has been a lone voice on the Committee.

The minutes did suggest, however, that the majority of the MPC are considering a fresh round of QE, as soon as next month.

The minutes said: “For most members, the decision of whether to embark on further monetary easing at this meeting was finely balanced since the weakness and stresses of the past month had significantly strengthened the case for an immediate resumption of asset purchases.”

There have been fears that the UK could enter a double-dip recession after a recent series of bad news from the economy and the ongoing debt crisis in the euro zone.

As a result, many other business groups and economists are urging the Bank of England to introduce QE sooner rather than later.

Returning to the BCC, its five-point plan suggests more growth policies need to be considered as the UK economy is stalling.

The BCC also believes that there should be a 1p cut in the National Insurance paid by employers and for the 50p rate of income tax to be abolished.

Commenting on its suggestions, John Longworth, director general of the BCC, said: “Only a strong and prosperous private sector will allow us to provide the public services we all want and need. The government needs to be prepared to introduce a package of measures that will strengthen business confidence, allowing them to grow, invest, export, and create jobs.”

However, the BCC does support the Government’s tough austerity measures, introduced to slash the budget deficit.

It said the deficit reduction plan is “vital to stabilising public finances”, which will in turn boost confidence.

However, it stresses that growth-enhancing policies should be considered.

Earlier this week, Labour leader Ed Miliband said the Government should consider measures such as lowering the VAT rate to boost growth.

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