More QE on the cards as eurozone troubles continue

The Bank of England could flood £50bn more into the struggling UK economy within weeks as the latest turbulence from the eurozone plays havoc with UK recovery hopes, experts warn.

Rate-setters are poised to act following the €100bn (£81bn) rescue for Spain's crippled banks and an election in Greece which markets fear could tip the stricken nation out of the euro.

The Bank of England Governor Sir Mervyn King warned in his Mansion House speech of a "large black cloud of uncertainty hanging over not only the euro area but our economy".

The Bank's so-called quantitative easing (QE) programme currently stands at £325bn, but analysts at Barclays Capital said that its monetary policy committee may crank up the printing presses again as soon as next month.

Its chief economist Simon Hayes said: "We previously forecast no further QE. The primary reason for our change of view is the deepening euro crisis. This is infecting the UK economy through tightening credit conditions and weak household and business confidence."

Further QE will come alongside £140bn in moves to pump funds into the banking system and boost lending to business.

May inflation figures this week, which should show the cost of living steady at 3 per cent, will also give rate-setters leeway to act.