New Money Boost Close After Knife-Edge BoE Vote

The Bank of England signalled on Wednesday that it was close to releasing a wave of new money into the shrinking British economy because of the worsening euro zone debt crisis. Such a move would effectively involve printing money to buy government bonds, in turn lowering British borrowing costs. Coming on the back of last week's announcement of new BoE and government measures to spur lending to businesses, it underlines the depth of concern that exists about the state of Britain's economy as its main trading partners weaken. The first of last week's new lending measures also took effect on Wednesday, when the Bank gave banks 5 billion pounds of low-interest six-month loans. The banks were urged by the Bank to take the money, sources told Reuters. Minutes of the BoE's last policy meeting showed officials split 5-4 against launching a new round of monetary stimulus by buying government bonds, a form of quantitative easing, significantly with Governor Mervyn King in favour. A Reuters poll taken after the minutes came out showed that economists now see a 80 percent chance of another round of QE next month. The last time the MPC was so divided was in June 2007 - when officials split 5-4 over whether to raise interest rates on the eve of the financial crisis - and the previous time King was in a minority was August 2009, when he also wanted more QE than the consensus. The minutes show far stronger support for more stimulus than many economists had expected, and follow the announcement last week of new Bank and government and help Britain's economy, which returned to recession late last year. Read more.