Britain braced for more stimulus

26th January 2012

The British economy could see another round of stimulus measures after Bank of England governor Sir Mervyn King warned 2012 was not going to be an easy year.

In the same week as British Government debt breached the £1 trillion barrier, Sir Mervyn cautioned that the recovery was likely to remain slow and tentative and that scope remained available for more stimulus. He also urged banks to be sensitive when deciding bonus pay, especially if they had received support from the taxpayer.

Sir Mervyn did not rule out another round of quantitative easing, with inflation falling he said the Bank of England retained the ability to leave interest rates at their record low levels.

Over the past year the British economy has seen growth of around 1%, with much of the blame for the anaemic figures placed on the squeeze on take-home pay and falling consumer spending.

Sir Mervyn added that banks need to be encouraged to lend and that it would be a tragedy to deny funds to those who need them, while rewards should be seen to be fair.

Copyright Press Association 2012

Category: Banking and Financial Services