View more on these topics

MPC could delay quantitative easing

Further quantitative easing may be put on hold because of a sharp jump in growth in the economy, says Capital Economics.

Gross domestic product unexpectedly rose by 0.8% in Q3 and although this was down on Q2 growth of 1.2%, it was double the 0.4% expected by analysts.

The Office for National Statistics says allowing for the recovery in Q2 following the bad weather at the start of the year, underlying growth in Q3 is broadly similar to that in Q2.

In October’s Monetary Policy Committee meeting Adam Posen voted to increase quantitative easing by £50bn.

But Jonathan Loynes, chief european economist at Capital Economics, says with inflation still well above its target, the growth will probably be enough to deter the MPC from reviving its asset purchases at its next meeting this month.

However, he adds: “Nonetheless, we do not think the growth transforms the outlook of a weak recovery once the full effects of the fiscal squeeze kick in. The economy will need more support from monetary policy, probably early next year.”

Brian Johnson, insolvency practitioner at chartered accountant HW Fisher & Company, says better than expected Q3 GDP is a good sign.
But he adds: “The key to recovery remains getting banks to lend and nothing has changed on this front.”

Figures last week from the British Bankers’ Association show the number of mortgage approvals in September hit 72,723 – down from 73,930 in August and lower than the six-month average of 75,941. Gross mortgage lending of £;8bn in September was 10.8% lower than a year ago.




“Hector Sants didn’t realise his new position came with a uniform.” STEVE WARD HOLMBRIDGE FINANCIAL SERVICES

August saw 19% year-on-year fall in secured loans

Secured loan business dropped 19% in August compared with the same month in 2009, latest figures from the Finance & Leasing Association show. Its members only did £22m worth of secured loans this August. In the three months to August 2010 secured loan business totalled £70m – a drop of 15% on the previous year. […]

Dates for your diary…

NOVEMBER 4 Monetary Policy Committee base rate decisionWe’ve had the Comprehensive Spending Review, now find out if anything in it has prompted the MPC to change the Bank of England base rate or quantitative easing. NOVEMBER 10-11 Mortgage Business ExpoIt’s been an interesting year in the mortgage industry, find out where it stands now and […]

Life after the CML

By Roy Armitage, head of credit at LendInvest Last month saw three-quarters of the membership of the Council of Mortgage Lenders (CML) vote in favour of plans to create a super-trade body, which would see the CML merge with the likes of the British Bankers’ Association and Payments UK. There is little room for misty-eyed […]


News and expert analysis straight to your inbox

Sign up