Economy: Quantitative Easing

Lord Bishop of Ripon and Leeds Excerpts

Monday 12th November 2012 Lords Chamber

[Lord Sassoon]

My Lords, I merely stated that, on the last numbers from the ONS, the economy is growing again. If we bring this back to the subject of the Question—quantitative easing—the Bank of England’s analysis of 23 August is that economic growth would have been lower in the absence of the asset purchases and unemployment would have been higher.

[The Lord Bishop of Ripon and Leeds]

My Lords, the Bank of England accepts that quantitative easing has pushed up the value of equities and other assets, so favouring the 5% of households which own 40% of those assets. Have the Government any plans to recoup any of this windfall gain that has accrued to the wealthy?

[Lord Sassoon]

My Lords, what the Bank of England has been doing through the quantitative easing programme has been targeted at 2% inflation but it has been completely clear about the other effects of the policy on the economy, GDP, inflation and equity prices—it says that that was a large but uncertain impact, estimated within the range that the right reverend Prelate gave. It is wrong to see that as a one-off windfall. In that case, was it a one-off disastrous fall in asset prices caused by the banking crisis that preceded it? It is difficult to say what was the one-off windfall.