Resist pressure to add to QE, warns BCC

The chief economist at the British Chambers of Commerce (BCC) has urged the Bank of England's Monetary Policy Committee (MPC) to resist pressures to add to its quantitative easing (QE) programme.

QE has been blamed for driving down the yield on Government bonds, which in turn has caused UK pension deficits to rise and annuity rates to fall.

The BCC's David Kern warned that the risks of adding to the existing £375 billion QE programme were higher inflation and a weakened sterling. Mr Kern said that the MPC should instead use its May meeting this Thursday to consider how the current QE programme can "support a revival of business lending."

In business lending news, new figures revealed that lending to small and medium-sized enterprises (SMEs) through the Government's Enterprise Finance Guarantee (EFG) scheme has reached its highest level since September 2011. Lending to SMEs in Q4 2012/13 reached £91.7 million.

Business minister Michael Fallon said: "It's important this isn't a one-off. Banks must continue to improve their use of EFG. Access to finance is a crucial issue to SMEs and economic growth will depend on businesses having the certainty that banks are lending. This increase needs to be maintained to improve business confidence and demonstrate that responsible lending can still take place."