When the Chancellor took office, he pledged to “reset” economic policy. And the Prime Minister, recognising the effects of the Bank of England’s policies on inequality, promised to bring about a “change”.
Today’s autumn statement falls far short of what the UK economy requires. Despite expectations earlier in the year that the government would announce a sizable stimulus package of investment in infrastructure, the announcement of a National Productivity Investment Fund amounts to a five-year commitment to spend just £23bn. But according to the government’s own plans, there is a pipeline of projects worth £483bn which need to be delivered.
The Chancellor is reluctant to borrow more because of concerns about the UK’s “eye-watering” national debt. But there is no need for the Treasury to scale back its plans. The Bank of England is creating £70bn as part of its quantitative easing programme. Currently, this money is being funneled into financial markets, artificially inflating asset prices, making the rich richer and lowering the cost of borrowing for foreign-owned, tax-dodging corporations.
There is an alternative. It’s in his power to change the way that QE works to require that the Bank’s money-printing programme be used to fund infrastructure instead. It’s an idea that has the support of more and more leading economists. 36 have signed Positive Money’s letter to the Chancellor, calling on the Treasury and the Bank of England to work together to replace QE with a fairer and more effective alternative.
This was also the subject of a 10,000-strong petition, delivered by Positive Money supporters to the Treasury on Tuesday.