BOE Should Seek Darling’s Consent to Print More Money,
Monday, July 6, 2009
july7
The Bank of England should ask the government for permission to start a further phase in its money- printing program because a recovery from the recession “is not guaranteed,” the British Chambers of Commerce said.
While Britain will return to growth in the final quarter, a recovery “is not yet secure,” the lobby group said in a report in London today. The central bank should extend its asset- purchase program to the full 150 billion pounds authorized by Chancellor of the Exchequer Alistair Darling and it should seek permission to spend even more, the BCC said.
Economists say the Bank of England may this week stick with its current plan to print 125 billion pounds ($202 billion) in new money as policy makers assess its effect in pulling Britain out of recession. The BCC’s survey of 5,600 companies showed today that manufacturing and services companies’ confidence improved in the three months through June.
“The worst of the recession is over, but the recovery is not guaranteed,” David Kern, the lobby group’s chief economic adviser, told reporters in London yesterday. “Policy is not yet effective and that has to change. They should go beyond 150 billion pounds.”
The Bank of England should print up to 200 billion pounds to spend in U.K. debt markets, Kern estimates. In a Bloomberg News survey of 36 economists, 20 said the bank will keep its current plan at the Monetary Policy Committee meeting on July 9, while the remainder said it will extend the program.
GDP Forecast
Gross domestic product will probably shrink between 0.1 percent and 0.4 percent in the second quarter before stagnating in the third quarter and growing as much as 0.5 percent in the final three months of the year, the BCC said.
While the economy shrank 2.4 percent in the first quarter, the most since 1958, there are signs that the recession is easing. U.K. manufacturing probably rose for a third month in May by 0.2 percent, according to the median of 26 economists in a Bloomberg survey. The Office for National Statistics will release the figures at 9:30 a.m. in London today.
Job losses in manufacturing remain a concern and unemployment in the U.K. will rise to 3.2 million by the middle of next year, Kern said. British carmakers have benefited from the government’s scrappage plan giving consumers a 2,000-pound subsidy to trade in old cars for new ones, and more programs of the kind are needed, he said.
A total of 29,796 vehicles have been registered under the scrappage plan since it was implemented on May 16, giving carmakers “a much needed boost,” the Society of Motor Manufacturers and Traders said yesterday.
“We should have more schemes that support businesses that are basically viable and are being forced to discard skilled labor,” Kern said. “The pressure on jobs is still very serious. It’s an area which has serious implications
While Britain will return to growth in the final quarter, a recovery “is not yet secure,” the lobby group said in a report in London today. The central bank should extend its asset- purchase program to the full 150 billion pounds authorized by Chancellor of the Exchequer Alistair Darling and it should seek permission to spend even more, the BCC said.
Economists say the Bank of England may this week stick with its current plan to print 125 billion pounds ($202 billion) in new money as policy makers assess its effect in pulling Britain out of recession. The BCC’s survey of 5,600 companies showed today that manufacturing and services companies’ confidence improved in the three months through June.
“The worst of the recession is over, but the recovery is not guaranteed,” David Kern, the lobby group’s chief economic adviser, told reporters in London yesterday. “Policy is not yet effective and that has to change. They should go beyond 150 billion pounds.”
The Bank of England should print up to 200 billion pounds to spend in U.K. debt markets, Kern estimates. In a Bloomberg News survey of 36 economists, 20 said the bank will keep its current plan at the Monetary Policy Committee meeting on July 9, while the remainder said it will extend the program.
GDP Forecast
Gross domestic product will probably shrink between 0.1 percent and 0.4 percent in the second quarter before stagnating in the third quarter and growing as much as 0.5 percent in the final three months of the year, the BCC said.
While the economy shrank 2.4 percent in the first quarter, the most since 1958, there are signs that the recession is easing. U.K. manufacturing probably rose for a third month in May by 0.2 percent, according to the median of 26 economists in a Bloomberg survey. The Office for National Statistics will release the figures at 9:30 a.m. in London today.
Job losses in manufacturing remain a concern and unemployment in the U.K. will rise to 3.2 million by the middle of next year, Kern said. British carmakers have benefited from the government’s scrappage plan giving consumers a 2,000-pound subsidy to trade in old cars for new ones, and more programs of the kind are needed, he said.
A total of 29,796 vehicles have been registered under the scrappage plan since it was implemented on May 16, giving carmakers “a much needed boost,” the Society of Motor Manufacturers and Traders said yesterday.
“We should have more schemes that support businesses that are basically viable and are being forced to discard skilled labor,” Kern said. “The pressure on jobs is still very serious. It’s an area which has serious implications
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