NIESR: UK will see more QE if growth weakens further

UK output softened in three months to August, and if the economy weakens further it will pave the way for more QE, according to the National Institute of Economic and Social Research (NIESR).

The institute's monthly survey of GDP showed the UK's output grew by 0.2% in the three month to August, compared to 0.6% growth in the three months to July.

According to the NIESR, if the UK's weak economic growth persists, it could prompt the MPC to introduce further quantitative easing measures.

"The UK continues to experience weak economic growth. But even this poor rate of growth is flattered by the drop in output in April," the report said. "If this economic weakness persists over the next few months, the MPC will probably implement a further round of quantitative easing."

NIESR expects the present 'depressive' period to persist, with output not expected to pass its peak in early 2008 until 2013, although it said the recession probably over unless output turns down again.

The institute interprets the term 'recession' to mean a period when output is falling or receding, while "depression" is a period when output is depressed below its previous peak.