The British economy shrank by 1.8 per cent in the three months to February, the National Institute of Economic and Social Research said today.
That followed output falling 1.7 per cent in the three months to January, the think tank said, predicting the pace of decline would only begin to slow when businesses finishing destocking.
"It is possible that increased availability of bank credit may make it easier for businesses to finance stocks and thus slow the rate of contraction," NIESR said.
"The policy of quantitative easing may help in this respect, but it is a pity that it is not focussed more on supporting the market for corporate debt since that would help businesses directly."
The British economy fell into recession in the second half of 2008 and the Bank of England last week cut interest rates to a record low of 0.5 per cent and said it would embark on a £75 billion asset-buying programme of mostly gilts in order to boost the money supply and thereby demand.
Reuters