By Max Clarke
The UK’s GDP continues to grow at a snail’s pace, rising by just .1% over the past quarter.
This continued poor economic performance, renowned economic body the National Institute of Economic and Social Research today argued, would not support a tightening of fiscal policy.
This is also the view frequently voiced by the British Chambers of Commence, the Forum for Private Business, the CBI and other business organisations, who feel that tightening monetary policy in the form of an interest rate rise would worsen the continued credit scarcity, significantly hurting businesses across the UK.
“Raising interest rates while the government is implementing its deficit-cutting measures would increase the risk of a major economic setback,” said the BCC’s Chief Economist, David Kern.
While the dangers an interest rate hike are known to the Bank of England’s Monetary Policy Committee, who yesterday voted to maintain the historic 0.5% low for a 28th consecutive month, the committee are facing increasing pressure to tackle the UK’s persistently high inflation.
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