The Bank of England injected a further £75bn (€86bn) into the UK economy today in a bid to jump-start its flagging recovery.
Its Monetary Policy Committee (MPC) voted to boost its quantitative easing (QE) programme – effectively printing more cash – from £200bn to £275bn despite the risks it poses to the country’s inflation rate.
Meanwhile, it maintained interest rates at 0.5%.
The move – the first change to QE since November 2009 – offers the clearest signal yet that the Bank thinks Britain is on the brink of a double-dip recession.
The Bank of England said it boosted QE because ``tensions in the world economy threaten the UK recovery'' and the slack in the economy is likely to be ``greater and more persistent than previously expected''.
The decision was welcomed by business leaders who have called for help to stimulate the economy after figures revealed that Britain suffered a deeper recession and is recovering more slowly than first thought.
A report by the Bank into the effect of QE on the economy previously found that the stimulus measure provided a “significant” benefit to growth and helped GDP increase by around 1.5% and 2%. This was equivalent to dropping interest rates by between 1.5% and 3%, the Bank found.