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IMF: UK should cut rates and boost QE

The International Monetary Fund says the Bank of England should look at cutting interest rates and consider more quantitative easing in a bid to tackle economic weakness.

The IMF says the Bank should “reassess the efficacy” of cutting rates below 0.5% and has called for further monetary easing, claiming that while monetary stimulus has helped, the economy remains flat.

The fund has endorsed the government’s deficit cutting plan, saying it has made “substantial progress” towards achieving a more sustainable financial position and reduced financial risk.

In its annual look at the UK economy, the IMF says the UK needs to use low borrowing costs to boost private sector investment. The IMF says the UK should follow the eurozone in offering banks cheap long-term funding, a move the Bank has resisted.

According to the Financial Times, the IMF says the UK should not relax its fiscal policy when tackling deficit reduction, but called on the government to consider slowing cuts in infrastructure spending and cut money in other areas where the effects are less severe, such as public sector wages.

Should these measures fail, the IMF says: “Fiscal easing and further use of the government’s balance sheet should be considered if downside risks materialise and the recovery fails to take off.

“Gains from delaying fiscal consolidation could be larger as multipliers are estimated to move inversely with growth and the effectiveness of monetary policy.

“Fiscal easing measures in such a scenario should focus on temporary tax cuts and greater infrastructure spending, as these may be more credibly temporary than increases in current spending.”


Banks must find £356bn to meet Basel III target

Major banks will have to raise an extra £356bn in capital to meet Basel III requirements, a Fitch Ratings report claims. Published last week, the report estimates that the 29 global, systemically important financial institutions might need to raise the money by the end of 2018. This could restrict their ability to increase dividends or […]

MS Leader: New housing a non-starter

The latest data from the Office for National Statistics on the number of new housing starts has made for grim reading. For the three months to the end of March there were 24,140 new starts, down 11% on the previous quarter.

Lloyds and Co-op proposal aims to facilitate sale of branches

Lloyds Banking Group and The Co-operative Bank have presented a hybrid proposal to the Financial Services Authority which would allow The Co-op to acquire 632 Lloyds group branches. Lloyds group’s branch disposal – Project Verde – is a European Commission requirement after the lender received state aid in 2008.The Sunday Telegraph reported that under the […]

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In Focus — May 2015: private medical insurance market in Germany

Welcome to the latest edition of In Focus. In this issue, Jelf examines the private medical insurance market for employers with expatriate workforces in Germany. This includes the common challenges faced in sourcing appropriate coverage, along with a selection of available solutions. This will be of particular interest to HR/reward decision makers with employees based in Germany. It will assess the cultural norms, risks and backdrop that are relevant to organisations with expatriate staff in this location.


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