Pressure grows on bank to boost recovery

Bank of England policymakers are facing mounting pressure to turn to further emergency measures to boost the recovery as the economic outlook becomes increasingly bleak.

The Bank’s Monetary Policy Committee (MPC) is expected to hold quantitative easing levels at £375bn after last month’s £50bn injection while interest rates will be kept at record lows of 0.5 per cent.

But economic growth figures released since the nine-strong panel’s July meeting revealed a sharper-than-expected decline in output between April and June.

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The outlook darkened as a key purchasing managers’ survey revealed the worst manufacturing performance in three years in July and initial reports suggested the retail sector was not receiving the Olympic Games boost previously expected.

The focus will also be on the eurozone, where the European Central Bank (ECB) will reveal its own policy decision for the month after its boss recently pledged to do whatever it takes to save the single currency.

Comments from ECB president Mario Draghi prompted speculation that the bank might return to financial markets and resume buying bonds of under-pressure countries while a further key interest rate cut is also possible.