Midland business leaders have welcomed the Bank of England’s decision to pump a further £50 billion into the UK economy in a bid to lift the country out of a double-dip recession but have also called for more to be done.
The London market moved higher after the Bank's Monetary Policy Committee increased its quantitative easing stock from £325 billion to £375 billion.
The MPC also announced a further standstill on interest rates at 0.5 per cent, the level which has existed since March 2009.
The move came amid signs the economy deteriorated in June as industry surveys showed the construction sector went into reverse and the powerhouse services sector suffered its worst performance for eight months.
Birmingham Chamber of Commerce Group urged the Bank of England to use the extension of quantitative easing to invest in the “real” economy.
President Michael Ward said: “The latest Greater Birmingham and Solihull quarterly economic survey revealed that domestic and export sales, while still growing, are beginning to slow as instability within the eurozone has dampened demand somewhat.
“Furthermore fewer businesses are reporting an improvement in their cashflow than in the first quarter.
“It was vital that we extended QE in order to improve liquidity within the economy.
“The Chamber would like to see the MPC using QE to purchase corporate bonds rather than Gilts as this would ensure that the benefit is better passed onto to private sector.”
Richard Halstead, Midlands region director at EEF, the manufacturers’ organisation said: “Weakening economies at home and abroad, together with the downward drift in inflation, will have tipped the balance to press ahead with more action.
“There is little if any momentum behind recovery, with events in Europe still unfolding and financial strains weighing on businesses and households, leaving further action necessary.
“However, getting the economy moving will rely not just on QE, but the Bank continuing to deploy all the tools at its disposal to boost demand and improve the flow of credit.”
The EEF has called for more competition in the banking sector to deliver a lower cost of credit and better lending terms and more sources of finance, particularly for fast growing SMEs.
It said it also wants better customer service for businesses whose trust in the financial sector has been dented and improved knowledge of the real economy in the finance community particularly the manufacturing sector.