3 June 2012

New £50bn Economy Stimulus, Possibly by Bank of England

It appears that the Bank of England will this week provide a stimulus package to the UK economy where it will include £50bn to benefit and stimulate business activities and help growth. It follows that Britain's Office for National Statistics stated "the recession that began in the first quarter of 2012 was deeper than it initially thought, with the economy shrinking by 0.3pc in the first three months of the year and not 0.2pc as it previously estimated."

This stimulus to be announced possibly this thursday, follows on the news that the eurozone economy is in difficulties following the latest market worries, combined with new data released that the British manufacturing output has declined unexpectedly. Furthermore, in this context, if Spain's difficulties get worse it will affect Britain directly, as many financial services in Spain are owned by British companies and Banks.

Additionally, the International Monetary Fund has recommended a further reduction in interest rates. However, this recommendation is anticipated not to be taken on Thursday, nevertheless some people believe that in the medium term this option will have to be accepted.