Bank of England looking at new round of quantitative easing

City analysts are forecasting that Bank of England policymakers will print more electronic money next year after the minutes of last month's central bank meeting revealed deep concern at the deteriorating economy and the eurozone debt crisis.

A collapse in consumer confidence this month, as well as figures published showing that the public finances were hit by a fall in corporation tax receipts, will add to the pressure on the Bank's monetary policy committee (MPC) to boost the £275bn of quantitative easing due to be completed early in the new year.

Minutes of the MPC's meeting this month showed that all nine policymakers saw little merit in an immediate increase in the purchase of assets such as government and corporate bonds, given uncertainty about the eurozone and the impact of quantitative easing.

However, some MPC members signalled their readiness to boost the economy further.

"Some members continued to note that the balance of risks to inflation in the November Inflation Report projections meant that a further expansion of the asset purchases programme might well become warranted in due course," the minutes said.

"Of those members, some thought that the outlook had deteriorated somewhat on the month," they said.

Inflation is expected to fall next year as the economy slows and further government spending cuts begin to bite.

Other members of the committee continued to see a risk of inflation falling more slowly than expected, noting continued strength in import and goods inflation.

Analysts said the minutes confirmed the view in financial markets that another cash injection was likely in February.

"They still have a dovish tone but the chances of a policy change in January have receded a little bit further after this, and our forecast is for more QE in February," said RBS economist Ross Walker.

With the government's hands tied by its pledge to balance the books, the central bank remains under pressure to support the economy.

The public finances appeared to improve in November after current receipts were 7.1% higher than the same month a year ago. But the Institute for Fiscal Studies said that expectations of an undershoot on the estimates of the Office for Budget Responsibility (OBR) were exaggerated.

It said: "While so far overall tax receipts are in line with the OBR forecast, there are risks around this. For example, despite a large downwards revision to their expectations for corporation tax receipts this year in the autumn forecast, meeting the OBR's projection still depends on strong growth in these receipts over the next four months, which would be a turnaround from the fall in receipts seen so far this year."

The Guardian