Financial analysts have called for the Bank of England to increase its quantitative easing programme to £200 billion.

The Bank’s Monetary Policy Committee (MPC) will announce its monthly decision on interest rates as well as providing an update on its quantitative easing programme later today.

David Kern, chief economist at the British Chambers of Commerce (BCC), said the programme of pumping money back into the economy should be increased from its £175 billion limit to £200 billion.

He said: "Despite some positive signs that the UK recession may be ending, the very disappointing recent decline in manufacturing output provides a stark reminder that recovery is not guaranteed.

"Large-scale job losses and the persistent weakness in lending to companies remain serious problems that must be resolved. Recent figures show that annual growth in lending to non-financial companies remains negative, and the pace of decline continues to worsen.

"To counter the threat of a relapse, we urge the MPC to increase the quantitative easing stimulus to at least £200 billion, and to consider a lower – or even negative – interest rate on deposits held by commercial banks at the Bank of England. This would penalise banks hoarding cash, and provide an incentive to lend to viable, credit-worthy customers."

Interest rates currently stand at 0.5 per cent, a 300-year low, with experts claiming it may stay at the same level into 2010.

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