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Is the Bank of England turning negative on the UK economy?

There is a feeling within financial circles that the Bank of England may be starting to turn a little negative on the UK economy and the prospects for 2010. At a time when many people assume the economy is over the worst, signs from Bank of England over the last 24 hours seem to indicate that confidence in 2010 is not as high as it has been over the last few weeks. So what is the problem?

One of the main issues appears to be the fact that quantitative easing, while supporting the economy in the short to medium term, is not really a long-term answer due to the massive expense. The Bank of England has spent up to £200 billion on the quantitative easing program so far but there is concern that economic activity and the strength of the UK economy could demise rather quickly as and when the program ends.

As a consequence, more and more people now believe that the UK government will place pressure on the Bank of England to inject more capital into the quantitative easing program from February 2010 onwards. However, this will open the government to accusations of political interference ahead of the general election.

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