The Bank of England should pump up to £200 billion into the economy in a bid to aid the country’s climb out of recession, the British Chambers of Commerce (BCC) said today.

The plea from the business group, which was the first to call the recession last year, has emerged just days before the Bank’s Monetary Policy Committee (MPC) is due to announce its monthly decision on interest rates and quantitative easing on Thursday.

The MPC has already pledged to inject £125 billion into the economy and is expected to extend this to the current limit of £150 billion in the coming months.

However, David Kern, chief economist of the BCC, said that the Bank should step up its efforts as the policy was not yet boosted credit supply. “We want to see the MPC accelerating and expanding the pace of quantitative easing ... they will have to go to £180 billion or £200 billion,” he said.

The BCC also called for the Government to draw up a credible plan to repair the country’s battered finances.

David Frost, director-general of the BCC, said that public sector pay freezes should “certainly be looked at”. He also called for a review of the “growing apartheid” between pensions on offer to those working at private companies and the gold-plated pensions available to public sector employees.

The BCC highlighted that while any recovery in the economy was not guaranteed, there was a heartening jump in confidence among businesses between April and June, with 2 per cent more manufacturing companies expecting turnover to improve rather than fall over the next year. The resulting balance of plus 2 per cent, is up from -38 in the first quarter. The gauge of confidence among service companies also rose from -48 to -8.

But Mr Frost warned that confidence could be undermined by onerous taxes and regulations. “Our economy is based on confidence, and wealth-creating businesses need to know that they will be given the freedom to drive the UK out of recession,” he said.

“The Government needs to think long and hard about its policies on taxation and red tape, which threaten to stifle growth and employment. The planned increase in National Insurance contributions is nothing more than a tax on jobs and it should be abandoned immediately.”

As it published its quarterly economic survey of 5,600 businesses across the UK, the BCC also said that one in ten people would be unemployed next year as the jobless figure soared to 3.2 million.

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