Sunday, November 8, 2009
Bank pumps $41B more into UK economy
The Bank of England's monetary policy committee voted Thursday to pump $41 billion in cash into the UK economy. The recession we feel here in the U.S is mirrored in the United Kingdom. The goal of the money is to induce spending, known as "quantitative easing." One major goal of the program is to instill confidence in consumers, that the bank still has ammunition to attack the recession. Speculation remains on the effectiveness of the quantitative easing program. Quantitative easing is a new program and its effects are not clearly understood yet. The third quarter registered continued contraction in the UK economy. One critical factor delaying Britain's exit from recession is the difficulty smaller firms face obtaining adequate finance.
Subscribe to:
Post Comments (Atom)
1 comment:
The article makes a very good point that the critical reason for delaying recovery in GB is the difficulty that smaller firms face in obtaining funds. European companies are highly leveraged, and if banks are having problems, most of the companies will have problems too. The same logic works for banks. If smaller businesses experience difficulties with making positive profits, banks will have problems too because of the increased number of bad loans and missed payments.
Post a Comment