“In the United Kingdom, business surveys have weakened further and suggest that the downturn has gathered pace. Consumer spending and business investment have stalled, while residential investment has continued to fall.” Service sector survey.
The Bank is also considering pressing the button on printing presses by engaging in a so-called policy of quantitative easing. Policy developed by the Bank of Japan in 2001.
"Despite the actions taken to raise bank capital, ease funding and improve liquidity, conditions in money and credit markets remain extremely difficult. The Committee noted that it was unlikely that a normal volume of lending would be restored without further measures."
The measures could include the direct purchases of assets, such as government debt or commercial investments, by the Bank or the Treasury, expanding the Bank's balance sheet and injecting additional liquidity and cash into the banking sector.
In normal times such a move would be highly inflationary, but with the UK facing deflation next year such a plan is now thought to be appropriate.
The European Central Bank reduced interest rates by three-quarters of a point to 2.5pc in the boldest move since the launch of monetary union and hinted at revolutionary action to head off a severe slump next year as the economic crisis ravages the car, steel, and machine tool industries.
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