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UK Treasury denies report of new money print

The UK Treasury has this evening been forced to deny reports that they are considering printing more money in the UK as a means of tackling the credit crunch. The suggestion is that the printing of new money would not come into play until UK interest rates hit zero and there was literally no other option left for the UK government. There is concern that this situation could occur sooner rather than later.

The process of printing money to try and refloat an economy is known as "quantitative easing" and was a tool used by the Japanese government as they fought the risk of deflation in the 1990s. The jury is still out as to whether "quantitative easing" actually works but in all honesty the UK Treasury and UK government are fast running out of options. As we have covered on a number of occasions, deflation is a major problem in the current economic environment because as prices fall, and are perceived to fall further, consumers will hold off their purchases hoping for cheaper prices tomorrow. This vicious circle can have a serious impact on the growth in an economy and also the business sector.

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