Lord Newby
Main Page: Lord Newby (Liberal Democrat - Life peer)Department Debates - View all Lord Newby's debates with the HM Treasury
(12 years, 8 months ago)
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Lord Sassoon
My Lords, the estimate of the effect of QE was set out in the Bank’s Q3 quarterly bulletin in 2011. The Bank estimates that quantitative easing raised real GDP by around 1.5 to 2 percentage points, so it has had a very significant impact on the real economy. As to the flow of credit to SMEs, that is not the purpose of quantitative easing. The purpose of quantitative easing, as I have attempted to explain, is for the Bank of England to meet the 2 per cent medium-term inflation target. Credit easing is a government policy and, in the next few days, details of the £20 billion national loan guarantee scheme will be unveiled. It is targeted at credit easing for SMEs, which is still a very important issue.
Lord Newby
My Lords, will the Minister underscore his last comment in that credit easing is now seen as crucially important in getting funding into SMEs? Can he confirm reports in the papers yesterday that the overall impact or scope of credit easing might not be the £20 billion which he has just mentioned but might increase over time to £40 billion?
Lord Sassoon
My Lords, I am certainly not going to pre-empt any announcements this week of that kind or any other, or I may not be here to answer the next Question at the Dispatch Box. I think that the £20 billion, which has already been announced, and reducing the interest rate that SMEs would otherwise have to pay by the order of 1 per cent would be a very good start.