Economic figures back case for more QE

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The UK economy slowed in the three months ending in November, supporting the case for the Bank of England to inject more stimulus into the economy, a leading economic think-tank said yesterday.

Gross domestic product grew by 0.3 per cent in the period, down from 0.4 per cent in the three months ending in October, the National Institute of Economic and Social Research said in its monthly estimate.

“Economic growth in the UK remains subdued,” NIESR said.

“These data lend support to the further loosening of UK monetary policy.”

NIESR’s estimate comes after official data earlier showed industrial output fell by 0.7 per cent in October, raising concerns that Britain may be sliding into recession.

Many economists reckon Britain may be heading for at least one quarter of contracting economic output, if not an outright recession, commonly defined as two consecutive quarters of negative growth.

Most analysts reckon the Bank of England will further expand its quantitative easing programme in February, when the current £75bn programme launched in October will be complete.

Last week, Bank of England governor Sir Mervyn King urged banks to brace themselves for a potential eurozone collapse amid fears that the UK is heading for a second credit crunch.