23 Feb 2009

More cash 'soon' in UK

11:19 am on 23 February 2009

A government minister has suggested that plans to inject more cash into the British economy could happen "quite soon".

Treasury Secretary Stephen Timms told the BBC the government and the Bank of England were in talks regarding so-called quantitative easing.

Quantitative easing effectively allows the bank to write cheques to banks in exchange for assets. The hope is that this will encourage banks to lend to consumers, who would spend more, helping economic recovery.

The BBC reports this method is seen as a way to help the economy, as the benefit from lowering interest rates is seen to be diminishing.

The Bank of England lowered interest rates to 1% from 1.5% on 5 February. It was the fifth cut since October.

Many analysts say cutting interest rates now will not be enough to get the economy back on track and that the main challenge is how to get banks to lend again.