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Bank Of England maintains UK base rates at current level

The Bank of England has today confirmed that UK base rates will remain at 0.5% for the immediate future and the £175 billion quantitative easing fund will neither be increased nor reduced until at least the next Bank of England meeting. This was pretty much as expected by economists in the city as the UK economy moves towards a "sit and see" stage. However, it would appear that the monetary policy committee were split on the prospects for the UK economy in the short to medium term, something which materialised last month.

Slowly but surely we are seeing more and more economists suggesting that 2010 could be as tough a year as 2009 unless action is taken in the short to medium term. Those who believe the worst is over could be right in the short term but next year is set to be as tough for business as 2009 was. This particular scenario will become stronger and more likely if UK banks still refuse to forward liquidity to both consumers and businesses in the short to medium term.

When you also consider the employment situation in the UK it begins to become apparent that the economy is still on something of a knife edge. Historically, consumers will hold back on spending until their job prospects are secure, something which could nip the ongoing recovery in the bud.

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