OECD: UK economy may need more stimulus

Bank of England The Bank of England also has the option of cutting interest rates to zero, the OECD said

The Bank of England should be ready to inject more money into the economy, the Organisation for Economic Co-operation and Development (OECD) has said.

If the UK economy remains weak, a further round of quantitative easing would seem the best option, it said.

The Bank has so far pumped £375bn into the financial system, creating money to buy back government bonds.

Some policymakers have questioned the effectiveness of QE, but the OECD said further action could "be warranted".

The OECD said in its latest UK economic survey: "Overall, in the current economic situation, further expansion of the asset purchase programme would be warranted if the economy stays weak."

It said cutting interest rates to zero was another option to consider, but added that it would not have "clear advantages over expanding QE".

The Paris-based economic think tank forecasts that the UK's economy will grow just 0.9% this year after shrinking by 0.1% in 2012.

The UK economy has suffered two recessions in the last four years and could be on the verge of another one, the so-called "triple dip".

In its report, the OECD also backed Chancellor George Osborne's decision to ring-fence banks' retail and investment arms. The organisation said, however, that it would require careful monitoring.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features & Analysis

  • Dr Mahinder Watsa Dr Sex

    The wisecracking 90-year-old whose advice column is a cult hit


  • Payton McKinnonLeft behind

    Why do so many children die in hot cars?


  • USA fanSoccer punch

    Has the US finally fallen in love with the beautiful game? BBC Sport


  • Cooling towers at the Temelin nuclear power station, Czech Republic, 2011Nuclear links

    The EU's dependence on Russian-designed power plants


Elsewhere on the BBC

  • Kyoto.Falling for Kyoto

    Acclaimed writer Pico Iyer describes an enchanting first stroll through the city

Programmes

  • (File photo) Usain BoltClick Watch

    Challenging the world's fastest man to a virtual race over 40m – can you keep up?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.