Bank Of England Due To Announce More QE

The Bank of England is expected to unleash another multi-billion round of emergency support for the UK economy today.

Despite signs that the UK's financial health may be starting to improve, the Bank's Monetary Policy Committee (MPC) is forecast to take fresh action.

Analysts believe it will extend its quantitative easing (QE) programme by another £50bn, taking the total to £325bn, in a bid to stave off a double-dip recession.

The Bank will announce its plans at midday, and is also expected to keep interest rates at their record low of 0.5%.

But further QE could spell bad news for pensioners.

It can fuel inflation, which would mean more gloom for retirees who have already seen the value of their pension pots eroded by the high cost of living and low interest rates.

The current programme of asset purchases, also known as QE, was due to be completed early this month.

The negative growth figures for the final three months of 2011 intensified the pressure on the BoE to inject further cash into the ailing economy.

But recent, more positive data from the UK services industry and other business surveys showing stronger than expected confidence have made it a closer call.

Nevertheless, all five Sky News money panel members anticipate additional QE to be announced at the MPC meeting.

Both RBS UK economist Ross Walker and Metro Bank chair Anthony Thomson expect a £50bn increase.

Mr Walker said: "The BoE's policy reaction function continues to betray a downside/activist bias: if in doubt, loosen policy.

"In the event that any further easing proved to have been the wrong move, the Bank could easily rectify this. The prospects of any change in Bank Rate remain fairly remote."

James Daley, editor of Which? Money, expects the cash boost to be "relatively modest" and for interest rates not change until 2013 at the earliest.

Louise George, founder of Peter Popple's Popcorn, said a further round of QE would probably be raised after recent data showed "a contraction in the money supply and weak borrowing by companies and households".

The jury was out among the panellists as to whether or not the UK would go back into recession - two quarters of negative growth - following the recent GDP figures.

Mr Daley said: "Although it's quite possible that Britain will slip back into recession, it seems unlikely that this second dip will be as deep or protracted as the first.

"The game changer, however, is the euro. If the eurozone cannot come up with a solution to the debt crisis, the impact on the UK will be significant."

Mr Thomson and Ms George were more positive.

"I think the recovery is fragile, but it will be a recovery nonetheless. I think we will see real growth, albeit small, this year," Mr Thomson said.

Ms George added: "At this stage it seems there will be very limited growth but not a double dip recession and growth is likely to be stronger than the other European countries."

Mr Walker summed up: "None of this should suggest the UK is about to have a stellar year. It isn't. Growth will be weak - we forecast expansion of just 0.8% - but that is meaningfully better than recession."

The panel members also gave their views on wider economic policy following the recent political furore over executive pay and bonuses.

Sir Martin Sorrell, CEO of communications services group WPP, said "We just have to face the fact that bashing bankers, bonuses and business works currently at the ballot box."

He urged businesses to "communicate to command their share of the voice", stressing that growth means jobs, Government revenue and help in areas of technology,education and infrastructure.

But Ms George added: "There has been a lot of scrutiny on banks and bonuses recently but the Government is in the process of implementing good policies in order to help strengthen the economy, in a better way than their European counterparts."