Manufacturers' organisation EEF is calling for the Bank of England to support the UK economy through its quantitative easing programme and extend asset purchases by £50bn.
In recent months many developed economies have emerged from recession following bolder policy decisions to boost growth. The outlook for the UK economy remains fragile and uncertain, however, and the Bank’s last round of asset purchases has been completed. In addition, the majority of fiscal stimulus measures in the UK will come to an end in the new year.
EEF believes that whilst the combination of these measures prevented the economy falling further and faster into recession, with little momentum of its own there are significant risks to turning off both monetary and fiscal taps at the same time.
Commenting, EEF Chief Economist, Steve Radley, said: “The benefits in other economies of bolder and larger stimulus packages are now clear to see and, with no further room for fiscal manoeuvre, the Bank must pull the remaining policy levers it has available.
“Any growth in the current quarter could well be fleeting, and the risks to a persistent undershoot of the Bank’s inflation target are growing. Business will need the support of a stable business environment and, with a recovery still on shaky ground, further efforts to remove blockages in the financial system and underpin confidence must remain a priority.”