Quantitative Easing only benefits the financial sector, finds research
9 October 2012
A review of evidence into Quantitative Easing (QE) has shown that the Government’s hope that it will pull the UK out of recession may be unfounded.
Professor Chris Martin, from the University of Bath’s Department of Economics, has looked at the impact of QE not just on financial markets but also the ‘real’ economy of jobs, inflation and output and concluded that there is no lasting benefit in continuing to pursue the policy.
He concludes that QE has produced a limited but temporary gain for the financial sector, but it has been of no help to the wider business community or individuals and families struggling against inflation and unemployment.
His review has looked at studies of the performance of QE by central banks, including numerous historical studies of small scale QE purchases and studies of the large contemporary QE programmes.
The policy of QE has seen the Bank of England buy £375 billion of financial assets through government bonds, to bring down the cost of government borrowing and lower interest rates across the economy.
