How long will quantitative easing take to kicking?
As the UK authorities get set to spend literally billions of pounds of "new money" there is concern that quantitative easing will take some time to filter through to the general UK economy. Historically the depression of the 1930s was so severe that similar economic stimulus packages took up to 3 years to kick in and bring around what was an ailing worldwide economy. If the same happens in the UK, and quite frankly nobody knows what to expect, the UK economy will be in a serious mess before any potential recovery may occur.
As we have touched on before, quantitative easing is literally the last throw of the dice for the UK economy and the UK government. Rumours have been circulating for some time that the UK government has been in discreet talks with the IMF (International Monetary Fund) although these rumours have been denied on numerous occasions. If quantitative easing does not kick in as quickly as hoped there is every chance that the UK authorities will need outside help.
Coincidentally the reduction in UK base rate, and the perception they could fall further in the short term, has further weakened sterling which is expected to come under more pressure in the short to medium term. This will in fact assist UK exports which will be cheaper for overseas companies to acquire because of the reduced exchange rate.
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