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IoD urges Bank to inject extra £50bn into economy – papers

by: IFAonline
  • 06/10/2010
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The Institute of Directors (IoD) wants a further £50bn in quantitative easing, on top of the £200bn already injected into the economy to boost the money supply.

“Monetary policy needs to help ensure a sustainable recovery is in place before the public sector recession begins,” said Graeme Leach, IoD chief economist.

“Yes, inflation is above target now, but a double-dip recession would raise the spectre of deflation. The growth threat is more of a danger than inflation.”

Despite better than expected services sector data yesterday, industry surveys have been pointing to a slowdown in the UK recovery, wrote the Telegraph.

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Cuts threaten to knock recovery as jobs ‘flatline’

The British economy is facing a sharp slowdown during the third quarter, with a possible contraction arriving at the end of the year.

Experts are forecasting that, as with the emergency Budget in June, the government’s spending review itself on 20 October threatens to erode business and household confidence still further – long before any cuts come into effect, writes the Independent. Fears are also growing the UK will witness a “jobless recovery”.

The Bank of England’s Monetary Policy Committee meets today and will announce its latest decision on rates and quantitative easing tomorrow.

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Ireland must honour debts, say business boss

Ireland’s business federation has joined foreign creditors in warning a default by Dublin on the junior debt of Anglo Irish Bank and other lenders guaranteed during the crisis would be a breach of faith.

“Ireland should honour its debts if it can,” said Danny McCoy, head the Irish Business and Employers Confederation (IBEC).

“The country makes a living taking capital from people and looking after it, and you don’t want to get a reputation for carrying out partial defaults,” he told The Telegraph.

Ireland’s financial services industry is around 9.8% of GDP, with big players such as Merrill and Citigroup operating from Dublin’s ‘Canary Dwarf’, wrote the Telegraph.

But foreign investment is also the lifeblood of the country’s manufacturing industry, led by computers and pharmaceuticals.

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IMF urges governments to maintain support to banks

Still feeble banks are the global economy’s “Achilles heel”, the IMF warned yesterday as it advised governments to make “the timing of planned withdrawal of some monetary and financial support more contingent on improved bank health”.

In its latest Global Financial Stability Report, the fund says progress to restore stability has suffered a setback, with markets still “sensitive to negative surprises”, wrote the Independent.

“Nearly $4trn (£2.5trn) of bank debt will need to be rolled over in the next 24 months,” the IMF said. “Planned exit strategies from unconventional monetary and financial support may need to be delayed until the situation is more robust, especially in Europe.”

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Buffett slams Wall Street pay

Warren Buffett, the billionaire investor, has hit out at pay practices on Wall Street, attacking the lack of reform despite two years passing since the financial crisis struck.

“People have a propensity to gamble, and it gets made easier and easier for them,” Buffett told a conference in Washington DC yesterday. “One of the problems we still have is we have unbalanced incentives for managers of huge financial institutions.”

In future, wrote the Telegraph, chief executives of banks who need government assistance should “go broke”, said Mr Buffett. Their wives “should go broke, too”, he added.

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