The Bank of England is set to pump up to £75bn of newly printed money into the ailing UK economy as fears grow that the eurozone crisis could drag Britain deeper into recession.

City analysts are expecting the Bank's Monetary Policy Committee (MPC) to extend its £325bn Quantitative Easing programme this week. The average forecast is for another £50bn of UK sovereign bond purchases.

But several economists say that the MPC is likely to go even further at its monthly meeting on Thursday. "We are confident this will be another occasion when the Bank of England errs on the side of doing more rather than less," said Sam Hill of RBC Capital Markets. He expects the nine-member MPC to vote to buy another £75bn in assets over the next four months.

According to Mr Hill, the MPC is likely to feel it has more room to stimulate the economy because inflation has fallen faster than many expected, with the Consumer Prices Index dropping to 2.8 per cent in May.

"The last two months of inflation data is the first time it has undershot the consensus since 2007," said Mr Hill.

Research by the Bank suggests that previous rounds of QE have boosted GDP, but also raised inflation.

Peter Dixon, a global equities economist at Commerzbank, said that the MPC's final decision could be influenced by signs of stress in financial markets next week.

He said: "Our working assumption is that the committee will raise the QE limit by £50bn, but given the fragility of the economy and financial markets we cannot rule out an even bigger increase."

At its June meeting, the MPC was split, with five members voting to keep the QE programme on hold and four voting to extend it. But the published minutes of that meeting showed that most MPC members acknowledged that "further stimulus was likely to become warranted at some point".

Since that meeting, the Bank Governor, Sir Mervyn King, who was in the unsuccessful minority last month, has dropped some heavy hints that the situation has deteriorated sufficiently to warrant more asset purchases.

At last month's Mansion House dinner he said "the case for a further monetary easing is growing".