By Maximilian Clarke

A host of dismal economic indicators, including an apparent contraction in the UK’s third quarter GDP and the first stagnation in industrial output in a decade, have prompted the British Chambers of Commerce to again urge the Bank of England’s Monetary Policy Committee to introduce a third tranche of quantitative easing.

November 2010, although the UK economy was no longer in recession, a prolonged credit scarcity compelled the MPC to issue its first wave of QE- a sum of £200 billion. It was a year later, in October, that the Bank injected a further £75bn in a bid to stimulate business confidence.

“Following the latest GDP figures showing the economy shrank at the end of 2011, there is a strong case for the MPC to increase QE to £325bn at its next meeting. While QE is not a panacea, and can cause problems for savers and pension funds, the overriding priority should be to avoid a recession.

“Increasing QE would help sustain demand in the economy, and keeping the exchange rate competitive would help British exporters cope with challenges resulting from the eurozone debt crisis. But an increase in QE will only be truly successful if supplemented by effective credit easing measures and policies to support growth, such as cutting red tape and scrapping the planned rise in business rates.”

John Cridland, Director General of the Confederation of British Industry has hinted that further quantitative easing may be beneficial for business, and though her did not go as far as to endorse it personally, stated that the CBI would support the MPC’s decision.

However, the decision is far universally encouraged. Shaun Richards, an independent economist and author, is vociferous in his opposition to the policy; even going so far as to state that quantitative easing has never worked and is simply used to create the impression that government is being proactive during times of downturn.