The Bank of England is dangerously ill-equipped to avert the next recession and remains mired fighting the last downturn, according to a report calling for the introduction of radical new policy tools.

According to the Institute for Public Policy Research (IPPR), the odds of a recession once every 10 to 15 years mean Threadneedle Street needs additional firepower for when the economy next begins to falter.

In all three of the last recessions dating back to the early 1980s, interest rates were cut by 4.5%5% in order to sustain economic demand. In the downturn following the financial crisis, the Bank had to go a step further with additional stimulus from quantitative easing, opting to pump 445bn into the economy by buying government bonds from the financial industry to help consumers and companies keep on spending.

The IPPR said an interest rate cut of that size would not be available any time soon given the current historically low level of rates. Meanwhile, quantitative easing would be unreliable because it boosted the wealth of homeowners and shareholders at the expense of pensioners and young people renting homes.

Alfie Stirling, author of the report, said: Current macroeconomic policy is dangerously ill-equipped to tackle the next recession, whenever it comes.

Interest rates will already be too low to allow for the cut that will be needed to stimulate demand. We are heading for a car crash if nothing is changed.

Alternatives to keep the economy running could include a new national investment bank, which would be similar to a policy put forward by Labour and used in countries such as Germany, France and China.

However, the IPPR suggested such an organisation could have a mandate for borrowing to finance economically and socially productive lending during downturns. ...

Q.

According to the article, which of the following accurately describes the reasons why the UK may need a new national investment bank? Check all that apply.

Answer Choices:

- Should a recession come right now, interest rates are too low to allow for the cut thats needed to stimulate supply.

- Should a recession come right now, interest rates are too low and could not be sufficiently raised in time to stimulate demand.

- Quantitative easing is unreliable as it benefits only homeowners and shareholders.

-Quantitative easing is unreliable as it benefits only pensioners and young people renting homes.