THE Bank of England yesterday left UK interest rates unchanged at 0.5 per cent and announced no expansion to its quantitative easing (QE-printing money) programme.
A Bank statement said: ‘The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5 per cent.
‘The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £325 billion.’
The bosses organisation, the CBI, said the Bank’s latest decision would have been ‘a tricky one’, given that both official and survey data continue to present ‘a mixed picture’ of the economy.
A recent poll of bourgeois economists showed 25 per cent of those asked thought the MPC would vote for more QE to try and achieve some growth.
CBI head of economic analysis Anna Leach said: ‘It seems that a “wait and see” position has been adopted for the moment.’
German Chancellor Angela Merkel said, ahead of her meeting with UK prime minister Cameron yesterday, that the EU needs a political union even if it means some countries integrating faster than others.
Speaking on German TV, she called for ‘more Europe’, including a budgetary union, saying ‘we need a political union first and foremost’.
She stressed: ‘Step by step we must from now on give up more competences to Europe, and allow Europe more powers of control.’
However, she has resisted calls for ‘eurobonds’.
Cameron said after meeting Merkel that he could appreciate that the Eurozone might require a ‘banking union’, but that Britain could not support that since UK citizens could not be responsible for foreign bank deposits; likewise with further measures of political union, which he conceded were necessary, but which the UK could take no part in.
In a conversation on Tuesday, Cameron and US President Barack Obama had agreed on the need for an ‘immediate plan’ to stabilise the single currency area and to restore market confidence in the ability of countries to support their banks and pay their debts.
Cameron told reporters in Norway on Tuesday that ‘speed is of the essence’ in dealing with the crisis.
He added: ‘Clearly, the Eurozone crisis is the biggest threat to the world economy, it is the biggest challenge that we face today. Obviously the Americans are concerned about this but the British economy is six times more exposed to the Eurozone than the US economy.’
However, the right-wing anti-EU media in the UK was insisting yesterday that there could be no place for the UK in a German dominated ‘united’ Europe or in a banking union.
Meanwhile, concerns continued yesterday on the state of Spain’s banks.
They require a bailout to the tune of 100bn euros. A failure to bail out will bring down the French banks who are up to their necks in Spanish debt.
