Britain's government and the Bank of England will flood its banking system with cash in a coordinated move to get credit flowing through its recession-hit economy, as the euro zone crisis casts a "black cloud" over the world economy.
The country will launch a scheme to provide cheap long-term funding to banks to encourage them to lend to businesses and consumers, and the central bank will activate an emergency liquidity tool, BoE governor Mervyn King said in his annual Mansion House policy speech to London financiers.
The case for pumping more money into the economy via further purchases of government bonds had also increased as the outlook for the economy had worsened, King said, though he again rejected calls for the central bank to buy private assets.
King said the euro zone's woes were leading to a crisis of confidence in Britain which was leading to a self-reinforcing weaker picture of growth.
"The black cloud has dampened animal spirits so that businesses and households are battening down the hatches to prepare for the storms ahead," he said
Read more: http://www.reuters.com/article/2012/06/14/us-britain-economy-idUSBRE85D1RA20120614
1 comment:
Which is more reprehensible, the immorality of stealing from those who have been prudent and saved for their futures in order to bail out the profligate? Or is it worse to be repeating policies of high spending, high tax, high money supply expansion, all of which damage the economy. The experience of Macmillan expanding the cash loan flow in order to defer the consequences of similar policies in his day was a twenty year disaster for the UK economy. Times change but the fact remains that additional borrowing never solves a business defect nor a political one.
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