QE unlikely to stimulate UK economy, news report says

17 October 2011

The second round of quantitative easing (QE) implemented in the UK will have little positive impact on the performance of the country's ailing economy, a new report has stated.

Earlier this month (6 October), the Bank of England decided to increase its budget for asset purchases by £75 billion to a total of £225 billion as officials attempt to stimulate the nation financially in the wake of the recession.

However, according to the latest quarterly study on the UK economy by the Ernst & Young ITEM Club published today (17 October) this is unlikely to be the case.

According to the group, Britain can now expect total gross domestic product (GDP) growth of 0.9 per cent this year - a decline on the 1.4 per cent predicted in July.

Peter Spencer, chief economic advisor to the body, observed: "The bright spots in our forecast three months ago - business investment and exports - have dimmed to a flicker."

By Asim Shah

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