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Treasury gives Bank of England go-ahead for £50 billion asset acquisition

The UK Treasury has today announced that the Bank of England has permission to use £50 billion of taxpayer's money to buy company debts and other assets in an attempt to inject further liquidity into the UK credit market. The move has been fully expected for some time and would appear to be the next step towards a "quantitative easing" strategy which has also been talked about for some time.

The suggestion is that as UK interest rates move towards 0%, with a further reduction expected next week, the Treasury will give the Bank of England further permission to print new money which can be used to buy back more company debts and more assets. The hope is that as bad debts and potentially toxic assets are taken off company balance sheets, in exchange for payments from the Bank of England, this will improve the standing of UK plc in general and inject substantial liquidity into the market.

In a separate development, David Blanchflower, the controversial MPC member who is set to leave his position in the short term, has attacked economists both inside and outside of the Bank of England for their reluctance to accept the UK was in serious trouble some time ago. He is the one person who has been pushing for UK base rate cuts since early 2008 when so many of his fellow MPC members were reluctant to take dramatic action.

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