The Bank of England has issued a new Monetary Policy Report presenting a fairly bleak view of the economic future for the UK. This is partly due to the economic impact of Coronavirus the measures taken by government in response, but also due to risks connected with EU Exit.
Section Four of the report looks at EU Exit and shows that around one-third of UK businesses are either entirely unprepared for EU Exit, or only partially prepared.
With the outlook weak, the Bank’s Monetary Policy Committee (MPC), has agreed to hold the base interest rate at 0.1%. The Bank is currently undertaking research on possible transition to Zero Interest Rate Policy (ZIRP), which has not been used in the UK before.
In the meantime, has agreed further quantitative easing (QE), worth £150bn. This extends the total value of the QE scheme to £875bn.
The new tranche of QE – electronically generated new money which will be used to buy government debt from investors – is intended to help support investor confidence and boost economic activity.
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