TO Philip Hammond (Chancellor of the Exchequer)
Instead of creating £70bn of new money to flood financial markets, the Bank of England and the Treasury should spend it on things which support investment, jobs and people’s incomes. It could be simply given out to ordinary people, used to fund a tax cut, spent on house-building or invested in infrastructure like schools and hospitals.
We’re calling on you, as Chancellor, to give the Bank the means to target the money at people, not financial markets.
The Bank of England has just announced that it will create £70bn of new money through its quantitative easing (QE) programme . Governor Mark Carney says that the aim is to support growth in the face of a potential recession. If that's his objective, you might think that the new money will go towards productive, job-creating areas of the economy like infrastructure or housebuilding. But it won't. Instead, the new money will be pumped into financial markets.
£70bn is a huge amount of money, and by using it to push up stock and bond prices, it’s likely to have disastrous consequences. Theresa May has said that she wants to build an economy that works for everyone , but more and more experts are warning that QE is a big driver of inequality. This has even been confirmed by the Bank of England’s own research . And what’s more, economists are increasingly sceptical that it will actually work.
The new Chancellor, Philip Hammond, has the power to change where this money goes. Newly-created money from the Bank of England should be spent directly into the economy, via a cash transfer to households, a tax cut, a housebuilding programme or for investment in infrastructure.
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