Chamber Calls For A Halt on QE

Commenting ahead of the Monetary Policy Committee's QE decision, Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, said:

“It is almost a certainty that interest rates will remain at the historic low of 0.5%. However, given the narrow vote last month of 5-4 against injecting a further £50bn into the economy, it is widely expected that the Committee will vote in favour of a further extension to its Quantitative Easing scheme.

“The Chamber remains critical of the current asset purchase programme and calls on the Committee to halt the current programme and deliver a more innovative response that will stimulate growth. From a regional perspective, the Bank’s Quantitative Easing scheme has been a failure. We have seen the damaging impact of inflationary pressure caused by the programme, reducing demand in the region and producing no benefit.

“By the Bank’s own admission the programme has not worked as intended so it must stop the current asset purchase programme now. The Bank needs a new approach to resolve the demand issues in the regional economies by investing in infrastructure and actually doing something positive. There is huge potential here in the North West and this would also help to alleviate the pressure on the construction sector, stimulate demand and provide a platform for growth and investment in the years ahead.

“I would urge the Committee to set up a special purpose investment vehicle to allocate money to regional projects that would stimulate far greater growth with far less than the £50bn that we are expecting, and encourage more private sector investment. The National Infrastructure Plan is £30bn and could be delivered far sooner.

“We must also be mindful that the Chancellor wrote to the Governor of the Bank of England in March 2011 indicating that the Government’s policy objective was ‘to achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. The Bank of England Act requires that the Bank is supportive of Government policy; perhaps they need a reminder from George?”