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Interest rates will remain low until end of 2010

A majority of economists questioned about UK base rates believe that the Bank of England is unlikely to increase rates before the end of 2010. While many economists believe this particular strategy is sensible and will work in due course, there is concern for those who have lived off their savings in the past and have been decimated over the last two years.

While there is no doubt that the UK economy is "over the worst", today we saw Denmark wriggle free of the recession while the UK still remains firmly rooted in negative territory. Whether or not the UK economy actually moves out of recession in the final quarter of 2009 is in many ways irrelevant because the UK has been left behind by a vast array of economies around the world. So what is happening to the UK?

Despite the fact that the UK government and the Bank of England have introduced a £200 billion quantitative easing program, there has been little impact on liquidity in money markets. There is a feeling that banks are holding back on new loans and new credit until the economy "settles down", placing us in a "chicken and egg situation". What should come first?

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