The Bank of England may be forced to inject a greater cash stimulus into the British economy than the £75 billion announced last month due to the impending threat of recession across Europe, according to a Reuters poll.
The Eurozone is teetering on the brink of another recession because of its slow decision-making over how to deal with its debt crisis and as Britain's biggest trading partner, the threat of European recession is economically significant.
Forty-four out of 52 economists polled this week said the Bank would inject further rounds of fresh money into the economy, with those who thought so sizing it at a median £325 billion - unchanged from a poll run last month. There was one forecast for £500 billion.
"Although we remain unconvinced that QE will do much to stimulate economic activity, it is one of the few policy instruments left to the Bank, which is why we look for more action," Peter Dixon, UK economist at Commerzbank, told Reuters.
The government is steadfastly keeping to its aggressive budget deficit-reduction plan, which will inevitably drag on economic growth.
So pressure will remain on the Bank to help offset that, even with inflation at more than double its 2.0 percent target.
Several respondents said it was likely the Bank would announce further rounds of asset purchases - which comprise mainly British government bonds held by banks - in the first quarter of next year.
"By the time that the Bank finishes the £75 billion of purchases, the fresh high frequency data will have shown a further weakening of the real economy," Brian Hilliard, chief UK economist at Societe Generale, told the Reuters poll.
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