Business leaders are calling for the The Bank of England to rekindle its money-boosting efforts ahead of this week’s meeting on interest rates.
The Bank’s nine-strong Monetary Policy Committee (MPC) is being urged by business groups to launch another phase of its Quantitative Easing (QE) programme to increase the money supply as Britain’s recovery falters.
But the majority of the MPC are not expected to back any moves yet and experts predict a “no change” decision once again on Thursday.
John Rider, Institute of Directors chairman in the West Midlands, said: “The time has come to act in view of the recent softening across a range of economic indicators.
“Given the urgent requirement to tighten fiscal policy through lower public spending, monetary policy needs to help ensure a sustainable recovery is in place before the public sector cuts take effect. Inflation is above target now, but a double-dip recession would raise the spectre of deflation. At the present time the threat to growth is more of a danger than inflation.
“And, with the fragile nature of the West Midlands economy, this region would otherwise be one of the first to suffer unless action is taken.”
Support for more QE is also increasing within the MPC, with a speech last week by member Adam Posen making it clear he feels now is the time to pump more money into the economy.
Manufacturing survey data on Friday from CIPS/Markit showed orders fell in September for the first time this year.
The US has also recently signalled willingness to support its slowing recovery with monetary policy action.
Business leaders in Coventry and Warwickshire would be ‘shocked’ if there was any movement on interest rates this week.
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “There is a great deal of talk about interest rates at the moment along with the quantitative easing programme which currently stands at £200 billion.
“The extreme arguments say, on the one hand, that rates should start to rise to cool the recovering economy and keep a lid on inflation while, on the other side, some believe there should be an extension of quantitative easing.
“We don’t believe either should or will happen. Yes, there are signs of an economic recovery but nobody can yet say that it is sustained. While GDP figures say the economy is growing again, hundreds of businesses across our patch are still feeling the effects of recession.
“We have a Government spending review this month which will signal more public sector cuts and while we recognise the deficit needs to be tackled head on, it will still have an impact on jobs and the economy.
“So putting up interest rates is not an option, I would be shocked if that happened. The low rate we have now is one of the factors that will help build a sustained, private sector led, economic recovery.”