Keep On Printing Money, Experts Urge Govt

Economists and business leaders have called on the Government to continue pumping money into the economy to prevent the risk of choking a recovery.

Three-quarters of the Sky News Money Panel say the Government should increase quantitative easing by at least £25bn when the Bank of England announces its latest interest rate decision at 12.00pm today.

However, some members believe that while the UK economy still needs help to come out of recession, quantitative easing is not the answer.

The panel is unanimous that the Bank should keep the cost of borrowing at its historic low level of 0.5%.

Those in support of pumping more money into the economy raised concerns about its delicate state, which continued to contract between July and September.

David Frost, director general of the British Chambers of Commerce, characterised the majority view.

"The quantitative easing stimulus should be raised immediately to at least £200bn, with the option of additional increases later on," he said.

"The economy is still very fragile and shows little sign of sustained growth", he said

Tax expert George Bull cautioned that withdrawing the quantitative easing stimulus risked destabilising what is at best a shaky recovery.

"The key judgement for the monetary policy committee is to understand when the training wheels need to come off the economic bicycle," he said.

"Too late and the economy comes to rely on an artificial support. Too early and we come crashing down to the ground."

However, chartered accountant Angela Beech argued that while the economy remains unstable, quantitative easing is not having the impact it was designed to achieve.

"History tells us this has never been a good idea, and should be abandoned as although it is designed to stimulate the availability of credit, there is still little evidence of that", she said.

Property expert Gary McCausland agreed, insisting further Government stimulus will not provide for a sustainable recovery.

"Although it may help ease pressures in the short term, printing money will not solve the problems in the longer term and will only help to devalue and weaken the pound further.

"Quantitative easing has served its purpose, its now time to let the economy and business recover and manage the current challenges without this intervention".

However, the panel unanimously agreed the bank rate should remain at its record low of 0.5%, with a number of the experts predicting it wouid stay there until the middle of next year.

Nick Parsons, economist at National Australia Bank said: "I would keep rates unchanged at 0.5% and expect to be saying exactly the same thing at every meeting until the general election".

The Bank of England will announce its interest rate decision at 12.00pm today.