Is the Governor depressed with the economy?

The Bank of England in Threadneedle Street, Lo...

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BANK OF ENGLAND GOVERNOR Mervyn King has pumped £75 billion more cash into the economy – trying to allay fears of a double-dip recession.

 

Telling Sky News, he said that he had real fears that the UK economy was on the brink of a recession – even a depression.

 

The QE measure (printing money) comes as earlier on in the week, the Chancellor and Prime minister told the country that they were sticking with their deficit reduction plans – which the Governor said he believed were keeping the UK in the blue zone, and not in the red.

 

But he did effectively imply that the UK economy was not looking healthy.

 

This huge injection of cash,, known as Quantitative Easing, means that the amount of cash that has been pumped into the UK economy now stands at £275 billion. 

 

The £75 billion is 25% more than what was predicted to be pumped into the economy.

 

He compared the current crisis to the 1930s, where there simply wasn’t enough cash moving around the economy.

 

Post 1945 onwards, he said there was more than enough cash being pumped around the economy, like blood pumping around the body.  But now, he said, like pre 1945, there simply wasn’t enough money moving around the economy.

 

A few months ago, there was talk of interest rate rises, but, for a few months on the trot; interest rates have stayed the same at 0.5%.

 

On Monday, Chancellor George Osborne told the Tory Party conference in Manchester that higher interest rate rises would be unhealthy for the economy – and that they would, for the moment, keep interest rates low – while inflation continues to soar.

 

Problems in the EUROZONE, with Greece on the verge of default, have also created strain on the British economy, the Governor claimed.

 

Inflation, the cost of goods and services, currently stands at 4.5% but, the Bank of England predict that in the months ahead, it will rise to a whopping 5%.

 

Earlier today, Thursday, former Tory Chancellor Nigel Lawson, now a Lord, said on the Daily Politics, that the EURO had been “doomed to fail.”

 

The scale of QE, (printing money), will be kept under review.

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