By Claire West
Birmingham and Solihull business leaders are calling on the Bank of England to do more to encourage bank lending and cash availability, which remain a concern within the business community.
Birmingham and Solihull Chamber of Commerce and Industry (BCI) expects the Monetary Policy Committee (MPC) to hold interest rates at its current record low of 0.5 per cent this month when the MPC announces monthly interest rates on Thursday.
Bridget Blow, President of Birmingham Chamber, said: “We urge the Bank of England to forge ahead to inject the final £25 billion of quantitative easing funds or to consider alternative measures. We were surprised by the previous decision to not extend the programme, particularly after Britain’s gross domestic product contracted by 0.8 per cent in the second quarter, rather than the forecasted 0.3 per cent.
“The total amount of cash pumped into the UK economy is now equivalent to almost 9 per cent of nominal gross domestic product yet bank lending remains weak.
“Quantitative easing has had a positive effect on business confidence as the Chamber’s most recent Quarterly Economic Survey proves. We believe that credit conditions would be even worse if the Bank of England had not implemented quantitative easing. Yet the case still remains that the economy is in a vulnerable state.”
Bridget Blow added: “We are not poised for a recovery. Sales and order figures remain historically low and a subdued outlook continues to be depicted in the labour market.
“To this end, it is vital that the government encourages the banks in their lending in an attempt to revitalize the economy.”