Quantitative easing could begin very soon as the authorities try to stimulate the slowing economy.
The Bank of England is to cut its lending rate to near-zero and start buying up corporate and government bonds within the next few days.
Ministers are already readying an official letter, green-lighting the controversial "quantitative easing", the Daily Telegraph reports. The process of buying up the bonds debt in order to increase the flow of credit - seen by many as the modern-day equivalent of printing money - could create an additional £150 billion of supply.
This would, it is hoped, encourage lenders to extend more loans to businesses and consumers. In turn, this could provide a stimulus to the economy in general, heading off the worst effects of the current recession.
Around £5 billion to £10 billion would be spent on the bonds each month following the government approval letter, the report adds.
Quantitative easing is generally employed by central banks as a tool of last resort, only utilised when lending rates go to zero. This is because radically expanding money supply by firing up the printing presses has the potential to stoke up inflation in the future.
Speaking to the newspaper, Michael Saunders, chief UK economist at Citigroup, said: "If done on a large enough scale, [quantitative easing] is a powerful form of stimulus.
"It is likely to ultimately stabilise the economy and buy time for the financial system to heal … Of course, if and when the recession eventually ends, the [Bank] will face the major challenge of judging when to scale back quantitative easing."
The Bank's Monetary Policy Committee meets later in the week, with its lending rate decision to be announced on Thursday. The rate is currently at an all-time low of one percent, having been slashed from five percent since last October.
