Ed Balls: Bank of England’s £75billion bail out of Osborne’s Plan


Ed Balls MP, Labour’s Shadow Chancellor, comments on the Bank of England’s decision on a further £75 billion of quantitative easing:

With our economy stagnated since last autumn David Cameron and George Osborne are now betting on a bail out from the Bank of England.

The Government’s reckless policy of cutting spending and raising taxes too far and too fast is demonstrably not working. But rather than change course the Government has spent the last week urging the Bank of England to step in and essentially print more money. The Bank of England has been left with no choice but to step in and try to offset the contractionary effects of George Osborne’s Budget plans

This is the Bank of England’s contribution to a Plan B. But while another round of quantitative easing may help, I fear it will do little to create the jobs and growth we desperately need if we are to get the deficit down. When monetary policy is already so loose – with interest rates at record lows – and with confidence depressed this is, as Keynes said, like pushing on a string.

What we really need is a change in fiscal policy from the Government – getting the deficit down in a steadier and more balanced way with a credible plan to get the economy moving again, like the five point plan for jobs Labour set out last week.

Two years ago George Osborne described quantitative easing as ‘the last resort of desperate governments’. Today he is desperately hoping it will bail out his failing economic policy.

Notes:

1. Previous comments made by David Cameron and George Osborne about quantitative easing:

“And quantitative easing – printing money by another name – is the last resort of desperate governments when all other policies have failed.”
George Osborne, Speech at Policy Exchange, 9 January 2009, http://www.conservatives.com/News/Speeches/2009/01/George_Osborne_We_need_action.aspx

“But in the end printing money risks losing control of inflation and all the economic problems that high inflation brings. And for the Treasury to float the idea carelessly is irresponsible in the extreme as it could shake the confidence of international markets.”
George Osborne, Speech at Policy Exchange, 9 January 2009, http://www.conservatives.com/News/Speeches/2009/01/George_Osborne_We_need_action.aspx

“Sometime soon [quantitative easing] will have to stop because in the end printing money leads to inflation.”
David Cameron, Speech to Conservative Party Conference, 8 October 2009, http://www.conservatives.com/News/Speeches/2009/10/David_Cameron_Putting_Britain_back_on_her_feet.aspx

“I don’t think anyone should be pleased that we have reached this point. It is an admission of failure and carries considerable risk”.
George Osborne, 5 March 2009, http://www.conservatives.com/News/News_stories/2009/03/Quantitative_easing_is_a_leap_in_the_dark.aspx

 

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