Thursday, 5 March 2009

Qualitative Easing

Quantitative easing is all the rage today. The Bank of England pumped £75 billion into the economy and reduced interest rates to 0.5% - both actions should be applauded but we need to ask where the £75 bn is going.

Simply increasing the amount of money available to commercial banks to borrow from the BoE and then lend to customers, means that the country suffers unfocused reflation. While there is clearly a need for businesses to gain access to borrowing, the government should use a large proportion of the money to stimulate green economies.

We need a national insulation programme, massive investment in renewables and public transport. Ploughing money into these areas would reflate the economy and create the green jobs that the country needs. This investment could be thought of qualitative easing perhaps?

1 comment:

scott redding said...

I'm surprised that there isn't more of a call, especially from Co-Op/Labour backbenchers, to not go back to the way things were, i.e. just get banks refloated so lending is back to "normal." Things like credit unions and building societies, places where you put money into, and you get money out of, and there isn't any transnational casino derivative funny business going on, should get more priority and support from the government to enable a shift away from High St banks.