Fears for recovery grow as lending slips again

Independent
"Households are saving more and trying to pay off debt at the fastest pace in years, raising concerns that the Bank of England's policy of quantitative easing – directly injecting some £175bn into the economy – is not yet having as dramatic an impact on spending and credit growth as some might have hoped. .....Colin Ellis, economist at Daiwa Securities, commented: "We think the case has been made for the monetary policy committee to increase its QE programme – although probably not before November. Whether the Monetary Policy Committee agrees remains to be seen. If anything, the recent signals from the bank, such as Governor Mervyn King's remarks at the Treasury Committee, suggest that the Bank is rather more optimistic than us about the impact of QE."That could mean it ends up doing too little (or moving too late), further lengthening the recovery and costing more jobs. The MPC already made several errors coming into the recession – and it needs to be careful now not to make further mistakes as the economy is showing signs of life."