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Quantitative easing or further base rate reductions?

The Bank of England has today given the strongest indication that UK base rates could fall to 0% in the very short term. With next month's meeting pencilled in by many as the perfect opportunity to drastically reduce UK base rates there is a feeling that quantitative easing could also be brought into play.

The Bank of England has already requested permission to "print money", which is known as quantitative easing, which will see the authorities increasing their investment in the UK economy and various areas of the UK business environment. However, quantitative easing is seen by many as a last-ditch effort to avert a potential depression in the UK such as the one seen in the US in the 1930s.

While no MP has been willing to come forward and consider the "D" word, many analysts fear that it is almost inevitable unless the UK government can instigate a further rescue plan as soon as possible. The US government is also in a similar situation after seeing the rate of US inflation fall to 0% last month, just one downward movement away from the dreaded depression!

Even though it would be wrong to say the UK is literally on the verge of a depression, there is no hiding the fact that unless the economy improves in the very short term the UK is at risk of a further slowdown which could actually lead to a very severe depression.

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