MPC must prioritise business lending

6th September 2013

Commenting on the MPC decision, announced today by the Bank of England, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:   -The MPC was right to keep interest rates and QE on hold.

Recent strong data has increased the likelihood that GDP will continue growing at a relatively fast pace in the third quarter. This will also strengthen expectations that interest rates will start to increase before Q3 2016, the earliest date forecast by the MPC.   -While Governor Carney is keen to reinforce the Bank's forward guidance, increasing interest rates earlier than the MPC expected shouldn't be a concern if the recovery continues to gather pace. Although the forward guidance boosts business confidence, it is only effective if the MPC remains committed to the inflation target, and does not increase QE. Any increase in QE at a time when the US considers withdrawing its stimulus could lead to a sharp fall in sterling and higher inflation, providing little benefit to exporters. Instead, we urge the MPC to consider policy measures aimed at boosting business lending. This means purchasing more private sector assets including securitized SME loans rather than just gilts.

You might also be interested in

Local Businesses List Cleanliness, Safety and Retail As Their Top Priorities For Improvement in South Yorkshire’s Civic Centres

Mon 8th July 2024

Safety, cleanliness and the quality of retail have all been cited by South Yorkshire businesses as top priorities for their local urban cores. This is according to the recently-published findings of the Town and City Centre Survey.

BCC Quarterly Economic Survey: Business Confidence Continues To Tick Up in Q2

Mon 8th July 2024

The BCC’s Quarterly Economic Survey – the UK’s largest and longest-running independent business survey – shows measures of business confidence and business conditions slightly improved in Q2 2024, albeit from a very low base.

Bank Seeks Further Evidence Before Rate Cut

Mon 1st July 2024

David Bharier, Head of Research at the British Chambers of Commerce reacts to the Bank of England’s latest interest rate decision


Mon 1st July 2024

Director General of the BCC, Shevaun Haviland, has urged the next Government to stop treading on eggshells around trade with the EU if it wants to grow the UK economy.