UK citizens could have received £6,834 each

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In response to potential economic uncertainties arising from the recent Brexit vote, the Bank of England announced it would be expanding its Quantitative Easing (QE) programme. Over the next 6 months it will be pumping an extra £70bn of new money into financial markets – bringing QE to a total £445bn.

But from 2009 to 2012, the Bank of England created £375bn of new money, which went directly into financial markets and most of it didn’t filter down into the productive sectors of the economy – the sectors that create new flows of goods and services over time.

Instead of directing new investment into infrastructure, businesses and jobs – the bulk of this money remained trapped in the financial sector or flowed into property. This merely inflated asset and property prices, and enriched the owners of these assets – with very little impact on productivity or output.

In fact, even the Bank of England’s own research has shown it exacerbated inequality.

The richest 5% of UK households became £128,000 wealthier, whilst most households wealth increased a little, or not at all.

The Bank’s research further suggests that, at the very best, the £375bn had a very modest impact on the economy, increasing GDP by 1.5-2%. In other words, every £1 of QE added just 8p to the economy. This translated into increasing incomes by a total of £500-800 per person in the UK.

At Positive Money we believe there is a much better way of using the money created through QE. It could be used to finance much needed investment in green infrastructure, hospitals and schools.

As an example, if just £10bn were created and spent on the construction of affordable housing, it could boost GDP by up to £28bn. This means that for every £1 GDP would increase by £2.80. In addition, we would have more houses and it could create up to 284,000 jobs.

On the other hand, if the £445bn of new money created via QE was simply distributed evenly amongst the population every UK citizen would receive a boost to their income of £570 per month for 12 months.

In total, every child, woman, and man would receive £6,834. This simple idea – also known as “QE for people” – would be 10 times more effective at boosting people’s incomes than conventional QE.

There’s a growing movement of ordinary people, economists and politicians calling for a better alternative – for this money to be spent in a way that benefits all of us.

Sign the petition calling on the Chancellor to give the Bank of England the means to target the money at people, not financial markets.

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