"Following last month's increase in the Quantitative Easing programme, we expected the MPC to adopt a ‘wait and see’ posture - with no changes to interest rates or QE.
“As the Pre-Budget Report has not provided a credible medium-term plan to curb Britain's budget deficit, the MPC’s job has become more complicated, making it harder for them to increase QE beyond £200bn.
“If the economy remains very weak, an increase to £225bn may be needed early in 2010. But, given the risks to the UK’s international credit status, it would be more prudent for the MPC to persevere with the existing QE programme.
“For now, the MPC and Government should focus their efforts on specific measures aimed at removing obstacles to bank lending. One critical factor delaying our exit from recession is the difficulties credit-worthy small and mid-sized firms face trying to obtain adequate finance. This issue must be addressed quickly to ensure that a recovery gets under way.”