The Bank of England will inject billions more of electronic cash into Britain's flagging economy, extending its quantitative easing programme by £50bn.

Economists had widely expected the Bank to resume QE after the UK economy slipped into contraction at the end of last year. Bank policymakers had warned that they saw inflation undershooting its target at the end of the year and hinted that more money-printing was on the cards.

At the end of its monthly meeting on Thursday, the Bank's monetary policy committee also left interest rates at a record low of 0.5%.

Most economists had expected an additional £50bn in QE, though some had forecast up to £75bn and a handful had forecast none at all.

The latest move comes on top of the £275bn of QE announced since the scheme was launched during the recession in 2009.

The decision comes despite business surveys last week suggesting a fresh fall into recession could be averted. Those reports showed a stronger-than-expected start to the year for the dominant services sector as well as for manufacturers.

Official data earlier on Thursday showed manufacturing output rose five times faster than expected in December, but the wider industrial sector fared worse than first thought over the fourth quarter.

Analysts now await the Bank's quarterly set of economic forecasts, to be published next Wednesday in the inflation report, for clues as to whether there will be any more QE later in the year.

"Recent survey data and today's industrial production figures are encouraging, but the UK data isn't all pointing in one direction," said James Knightley at ING Financial Markets, forecasting that weak consumer spending will see the economy stagnate in 2012.

"With inflation plunging due to weak corporate pricing power, falling commodity prices and last year's VAT hike dropping out of the annual comparison, the Bank of England has considerable room to step up its quantitative easing efforts even further."

The Bank justified the latest decision to inject fresh money by arguing that the UK recovery slowed during 2011 and that inflation was on track to undershoot its government-set target.

In a statement, the monetary policy committee said: "Some recent business surveys have painted a more positive picture and asset prices have risen. But the pace of expansion in the United Kingdom's main export markets has also slowed and concerns remain about the indebtedness and competitiveness of some euro-area countries.

"In the light of its most recent economic projections, the committee judged that the weak near-term growth outlook and associated downward pressure from economic slack meant that, without further monetary stimulus, it was more likely than not that inflation would undershoot the 2% target in the medium term."

The Bank argues that the scheme, under which it prints fresh money and buys government bonds with it, has boosted output and helped keep a lid on borrowing costs and inflation. But critics say it has done little to help businesses and households and has damaged pensioners' finances by artificially depressing annuity rates.

TUC general secretary Brendan Barber said resuming quantitative easing was the right thing to do given recent economic weakness, but that the extra money must get through to companies.

"More needs to be done to ensure that this latest injection of cash actually reaches the businesses that need it, rather than just gathering dust on banks' balance sheets. The failure of banks to increase net lending to businesses, despite £275bn of quantitative easing, is holding back growth in the real economy," he said, demanding more pressure on banks from the chancellor, George Osborne.