Schroders expects May Bank of England QE boost

Bank of EnglandSchroders, the UK listed fund manager, expects the Bank of England to inject a further £25-50 billion (€29-59 billion) of liquidity into the UK economy in May as part of the quantitative easing (QE) programme.

The move should complement the government’s funding for lending scheme, says Azad Zangana, Schroders European economist.

The UK has narrowly escaped an unprecedented triple dip recession, says Zangana, based on estimates of GDP in the first quarter.

Zangana says the UK economy should pick up in the second half of the year on the back of stronger corporate investment.

However, the key threat in the near term is the faltering Eurozone economy – the UK’s biggest export destination.

“Political instability coupled with severe austerity is damaging confidence in the Eurozone, and having a knock on impact on UK exporters.

“We expect the Bank of England to respond with another £25-50 billion of quantitative easing in May, which will complement the expansion of the funding for lending scheme.”

The scheme is meant to encourage banks to lend to businesses. 

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