The jury remains out on whether the government will opt for another round of quantitative easing (QE) of putting extra capital into the UK economy to boost economic confidence and jobs creation, according to Donald McRae, Bank of Scotland chief economist.

The UK’s GDP figures out today reveals the UK economy grew at 0.2%, down from 0.5% in Q1.

McRae told Recruiter: “The dangers of QE is pick up of inflation – it is already way over target at 4.2% with a target of 2%. A lot of that inflation is due to energy, food and taxation. A lot of is it is imported and is not representative of core inflation but core inflation is higher than we would like. The danger is it will lead to high inflation or it will not come down as we would like.

“There is not a direct link between increasing QE and increasing production. I hope it would go to increase asset prices like shares and increase bank lending. The retail is sector is suffering as it is depressed and only increasing at a slow rate as a result of low customer confidence.

“You have to balance reducing the deficit and keeping the debt increase to where we are budgeting for the next few years. We may have to put up with slow growth until we get this rebalancing and the budget deficit eliminated. We are actually better than other many other economies at the moment in our debt to GDP level.”