QE is Too Little, Too Late, Given the Size of the Challenge

2nd February 2015

Commenting on the European Central Bank (ECB) announcement of a new quantitative easing (QE) programme, John Longworth, Director General of the British Chambers of Commerce said: -The ECB has to act to prevent the Eurozone from falling into an even more dangerous situation, but the ECB's proposed QE programme may be too little, too late, given the size of the challenge.

-The impact of Eurozone QE is heavily dependent on the money reaching Eurozone businesses rather than flowing to, and through, bank balance sheets via government bonds. QE must improve conditions in the financial system and increase the availability of credit to private sector businesses in order to work. -The health of the Eurozone economy has a clear impact on the prosperity of the UK. Businesses in Britain, particularly our manufacturing exporters, are watching with concern to see how the ECB's QE programme impacts sterling. -The ECB's QE programme is unlikely to solve the fundamental challenges facing the Eurozone, which needs sweeping structural changes to return to health. UK businesses will continue to trade with Europe but only a broad-based recovery in the Eurozone would enable them to achieve their export ambitions in continental markets.