No Bank emergency moves expected
The increasingly likely prospect of the economy going into reverse in the final quarter is not expected to push Bank of England policymakers into rolling out further emergency measures this week.
The Bank's Monetary Policy Committee (MPC) is forecast to hold interest rates at a record low of 0.5% while its quantitative easing (QE) programme will stay at £275 billion after October's shock increase.
The MPC pumped an extra £75 billion into the economy last month amid signs the recovery was heading to the rocks, and while the picture has continued to worsen, economists do not expect further action until early next year.
Howard Archer, chief UK and European economist, said: "The fact that all nine MPC members favoured a £75 billion dose of QE - and even considered a £100 billion helping - at their October meeting reinforces belief that they will be prepared to dish out more stimulus if the economy fails to rally."
Purchasing Managers Index data for October on the powerhouse services sector and manufacturing industry released earlier this week both pointed towards the UK economy contracting in the final three months of the year.
While the gross domestic product (GDP) in the third quarter grew at a better than expected 0.5%, economists warned the figure overstated the underlying health of the economy.
Meanwhile, the crisis in the eurozone - which the Bank cited as one of the key threats to the UK recovery - continues to escalate as EU leaders fail to reach an accord on solving the region's problems.
Brian Hilliard, economist at Societe Generale, expects the meeting to involve some lively discussion and said there was a chance that further QE could be enacted.
He said: "In the light of the new forecasts and the explosive euro situation, there will obviously be a discussion on the sensitivity of policy to any possible short term developments."
He went on: "This means that there is a low but not insignificant risk that the MPC chooses to expand the QE2 plans and/or accelerate the pace of asset purchases."