Small business owners will welcome news that the British Chambers of Commerce are backing the Bank of England’s plans to keep interest rates low, in an effort to avoid setting back the UK’s economy and adversley affecting growth.
The BCC’s Chief Economist, David Kern, commented:
“We fully support the decision to maintain interest rates at 0.5% and the size of the Quantitative Easing programme at £200 billion. Given the dangers still facing the economy, the MPC must persevere with expansionary policies that help businesses to invest and grow.”
Mr Kern went on to add that whilst there were signs that the economy is improving, growth still remains in a fragile state, and small businesses continued to face some serious obstacles over 2010.
It’s believed that there is still a very real threat of a double-dip recession at such an early stage of recovery, and the problems experienced in the Eurozone and upheavals in the global financial markets could increase risks to the UK.
It is therefore very important that the Bank of England continues to be cautious regarding interest rates, however, maintaining low interest rates is unlikely to be feasible in the long-term. Mr Kern believes that should unemployment continue to rise then the Government may need to consider continueing the Quantitative Easing (QE) programme to pump more money into the economy.
The Chancellor is expected to present a credible plan for tackling the country’s deficit in the emergency Budget on June 22nd.