The Bank of England's Monetary Policy Committee voted unanimously this month not to extend its quantitative easing programme further, minutes of the meeting released yesterday showed.
The minutes did, however, indicate a divergence of views among MPC members about the outlook for inflation in the second half of 2012. Official figures also showed that public borrowing came in at £18.1bn in November, down from £20.4bn in November 2010, leaving the Government on course to bring down the deficit for 2010-11 to £127bn. But some analysts warned that the deficit reduction timetable could yet be thrown of course.
"The Government's welfare bill is likely to increase as unemployment rises and tax revenues may come in weaker than expected as spending by households looks set to weaken next year," Chris Williamson, the chief economist at Markit, said.
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