BOE Stimulus Expansion May Not Be Enough for Recovery, BCC Says

More Bank of England stimulus may not be enough to revive U.K. economic growth and the government must improve companies’ access to credit to aid the recovery, the British Chambers of Commerce said. The BCC forecasts policy makers will increase their target for bond purchases by 50 billion pounds ($77 billion) to 325 billion pounds in the first quarter. Still, Chief Economist David Kern said “this will not achieve its full potential in supporting growth unless supplemented by the early introduction of a sizable and effective credit-easing program.”

Britain’s economy probably stagnated in the fourth quarter, and U.K. banks expect to tighten criteria on loans this year because of strains in funding markets related to the euro-area debt crisis, which may further impede investment and economic growth. The Bank of England is in the last of a four-month round of bond purchases and some policy makers have indicated more stimulus may be needed. “A new recession is not a foregone conclusion,” John Longworth, director general of the London-based BCC, said in an e-mailed statement today. “However, action is needed urgently to tackle short-term stagnation and a lack of business confidence, damaged by the ongoing euro-zone crisis.”

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