Partly Cloudy

Partly Cloudy

max temp: 8°C

min temp: 7°C

ESTD 1874 Search

UK: MPC leaves monetary policy on hold

12:07 06 December 2012

The Bank of England

The Bank of England

BANK of England policymakers held back from prescribing further emergency medicine to the economy today despite gloomy signs that the recovery is stalling.


The bank’s Monetary Policy Committee (MPC) kept interest rates at their record low of 0.5% and held its quantitative easing (QE) stock at £375billion.

The announcement came as official figures revealed the country’s trade deficit - the gap between goods imported and exported - widened markedly.

It also follows George Osborne’s gloomy Autumn Statement, in which the Chancellor extended the age of austerity against a backdrop of weaker growth and a wider deficit.

Combined with weak surveys on the services, manufacturing and construction sectors, economists still expect the bank to unleash further QE in the new year.

But the economy returned to growth in the third quarter when gross domestic product (GDP) rose 1%, ending the longest double-dip recession since the 1950s.

A second estimate from the Office for National Statistics (ONS) confirmed the performance and revealed the strongest rise in household spending in more than two years in the period.

And there are also doubts among some MPC members over the possible impact, or lack of, of more QE.

In today’s trade figures, the overall deficit in goods and services rose from £2.5 billion to £3.6 billion in October, driven by a 1% fall in exports and 2.5% rise in imports.

The widening in the trade deficit was split roughly evenly between EU and non-EU countries.

Meanwhile, the deficit in goods in the three months to October widened to £28 billion, its highest level since records began.

The Office for Budget Responsibility (OBR) slashed growth forecasts for the next five years yesterday and predicted a borrowing bill some £84 billion higher than its last estimate.

Earlier this month, the minutes of the November MPC meeting appeared to keep open the possibility that the Bank will push the QE button again, should the economy disappoint further.

The underlying picture of the economy remains bleak with a disappointing series of surveys on the services, construction and manufacturing sectors.

Bank governor Sir Mervyn King said the economy could shrink again in the fourth quarter and the OBR agrees.

The MPC also revisited the case for lowering interest rates from 0.5% to 0.25% at its November meeting but decided this was unlikely for the time being.



A file picture of the Sanofi factory in Haverhill.

More than 50 jobs are to be axed at the Haverhill site of pharmaceutical group Sanofi.

Georgi Rollings, left, and Emma Lawrence of Starfish Accounting.

An Ipswich based provider of online company secretarial software has reached the landmark milestone of having 10,000 users.

Robert Hughes, managing director of Hughes Electrical, and Andy Yallop, store manager, at the company's new branch in Bury St Edmunds.

Hughes Electrical has opened the doors of its new store in Bury St Edmunds following a £200,000 investment which has also created six new jobs, doubling the size of its workforce in the town.

Barclays has been fined £72m by the Financial Conduct Authority.
Photo: Jonathan Brady/PA Wire

Banking giant Barclays has been fined £72million by the City watchdog for failing to handle potential financial crime risks relating to a £1.88billion transaction for ultra high-net-worth clients.

Members of the Suffolk Chamber of Commerce team outside the chamber's offices at Felaw Maltings in Ipswich.

Suffolk Chamber of Commerce is among the nominees in two categories of the British Chambers of Commerce Awards, which are due to be announced at a ceremony in central London tonight.

Ipswich council leader David Ellesmere at the former sugar beet factory site off Sproughton Road.

A new Enterprize Zone involving 10 development sites across East Anglia, with the potential to create 18,500 jobs, was announced by Chancellor George Osborne today.

The Chancellor of the Exchequer, George Osborne, delivering his joint Autumn Statement and Spending Review to MPs in the House of Commons
Photo: PA Wire

The Chancellor’s Autumn Statement and Comprehensive Spending Review today divided opinion between unions employers.

Natalie Moloney, of Woodbridge events firm Pink Lemonade Productions.

An entrepreneur is up for a fifth business award since her event planning company launched last year.

Tony Willson, managing director of Helmsman Services.

Colchester-based training specialist Helmsman Services has secured the largest contract in its 17 year history, for its construction-specific e-learning health and safety courses.

Thomas Cook has reported its first annual profit for five years.

The boss of holiday firm Thomas Cook said yesterday that disruption experience since the deadly terrorist attacks in Tunisia, Egypt and Paris was “unprecedented” in his 30-year career.

Most read

Most commented

Topic pages

Local business directory

Our trusted business finder

Property search

e.g. Oxford or NW3
Powered by Zoopla

Digital Edition

Read the East Anglian Daily Times e-edition today E-edition

Great British Life

Great British Life
MyDate24 MyPhotos24