Belfast Telegraph

Home News UK

Chris Huhne asks Bank of England to pump billions into ailing UK economy

Energy Secretary Chris Huhne has called on the Bank of England to inject more cash into the UK economy.

The Liberal Democrat Cabinet minister said a further round of quantitative easing (QE) would be "sensible" given the "flatness" of growth.

His proposal came as official figures revealed record Government borrowing in August despite the Chancellor's austerity measures.

Public sector net borrowing, excluding financial interventions such as bank bail-outs, hit £15.9 billion in August, up £1.9 billion on the same month a year ago, the Office for National Statistics (ONS) said.

This was the highest figure for the month since records began in 1993.

The Government borrowed more after income tax receipts fell for the first time in the month and expenditure rose after an unusually low figure in July.

This leaves current net borrowing since March at £51.5 billion, down £3.9 billion on the same period the previous year.

Mr Huhn's comments followed Business Secretary Vince Cable's suggestion that ministers should adopt a more hands-on approach to monetary policy despite the Bank's independence.

On the fragile state of the British economy Mr Huhne said: "Certainly there have been discussions about, for example, quantitative easing. That is up to the Bank of England, it is their responsibility, they are responsible for monetary policy and interest rates and I'm sure there will be an ongoing discussion in the Bank about exactly that."

He added: "I think that Vince has made his position clear. I think it is a matter for the Bank, it's certainly one of the options and it would probably, in the present circumstances given the flatness of the economy, be a sensible thing to do."

He dismissed reports of a £5 billion spending injection by the Government, saying there was "no room" in the budget for such a move and acknowledged there was a "very dangerous" global economic situation following the IMF's decision to downgrade the UK's growth forecast.

Mr Huhne said: "The IMF, unfortunately, has downgraded not just the UK but also the eurozone and also the United States. We have a very difficult world situation, there is no doubt about that.

"I certainly don't recognise any proposals of the nature that's been reported, that there's a £5 billion or £6 billion proposal for any increase in spending.

"In fact, one of the great achievements of the Government has been to get the deficit down and get us out of the danger zone, despite the fact that we have a much bigger budget deficit than a lot of the countries that have been through crises.

"We have got the credibility to get it down and we haven't been sucked in to the crisis that has affected Ireland, Portugal, Spain, Italy and Greece.

"That is an enormous achievement and we shouldn't do anything to imperil that. What we can do is to be more creative and imaginative about ideas to boost growth and that is going on within Government.

"But it's about getting private spending going, private investment going because we don't have the room to do that on the budget."

He also backed party leader Nick Clegg's call for some capital spending projects which have already been approved to be brought forward at an earlier stage.

He said: "As Nick was discussing, bringing forward capital projects if we can to accelerate them from plans which might have had them further back in the comprehensive spending review period, bring them forward to help get them going."

Belfast Telegraph


From Belfast Telegraph