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Will Mervyn King win through at the end of the day?

Last week's revelation that Mervyn King, the Gov of the Bank of England, had demanded a £75 billion extension to the quantitative easing program as opposed to the figure of £50 billion which was agreed by the MPC has got many analysts and experts wondering what may happen next. Mervyn King has only been in the minority with regards to MPC votes on three occasions since 2003 and has a reputation for eventually getting his own way. Whether he will be able to extend the quantitative easing program yet further next month remains to be seen but there are signs that the Bank of England is prepared to do anything to escape a Japanese style 1990s economic implosion.

While many people have been discussing the threat of inflation it now appears that deflation is possibly the greatest threat to the UK economy in the short to medium term. By throwing extra liquidity at the financial markets it is hoped that the Bank of England, in conjunction with the UK government, will be able to increase liquidity in the consumer and business sectors and eventually refloat the economy with little damage to prices and stability. But why has concern increased so dramatically over the last few weeks?

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