Quantitative easing cannot offset the contractionary effects of tax rises and spending cuts that go too far and too fast

Ed Balls MP, Labour’s Shadow Chancellor, said in response to the Bank of England’s decision on a further £50 billion of quantitative easing:

“The Bank of England is doing all it can to try and boost our flatling economy, but it can’t perform miracles. Simply printing more money cannot offset the contractionary effects of George Osborne’s tax rises and spending cuts that go too far and too fast – a ‘drag’ on growth that the Governor of the Bank of England acknowledges in his letter today.

“With interest rates at record lows and confidence depressed, there is only so much a further loosening of monetary policy can do. After all, since the last round of quantitative easing was announced in October our economy has gone into reverse.

“Three years ago George Osborne said that quantitative easing was the last resort of desperate governments. He is now desperately hoping will bail out his failing economic policy. But with unemployment soaring and £158 billion more borrowing than planned, what we desperately need is a change of course and Labour’s five point plan for jobs and growth to get our economy moving again and so get the deficit down.”

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Posted February 9th, 2012 by Ed's team