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A better Idea for Quantitative Easing

Published 12/04/2012 00:00:00

I am sure you read in the news that the Bank of England is throwing in another £50 billion into Quantitative Easing. Remember this is not money which goes to the economy this is money which goes to the banks so that the banks can sell government bonds back to the Bank of the England and can buy more government bonds from the treasury. I am sure it is good business for someone. I am also sure that it is not good business for small businesses and SMES because those funds simply do not reach that sector of the economy. Yet it is ever so important. A recent article by Richard Tyler in the Daily Telegraph outlined how important it is to give business grants to small businesses and how beneficial it is for the whole economy. So my suggestion is this: why not use the £50 billion and produce a direct grant system to small SMES – perhaps to buy more machinery or equipment to increase their productivity or to employ staff (in other words to link into anything which benefits the wider economy). I somehow feel that such an approach by the Bank of England would have a much bigger multiplier effect for the underlying economy.

I would love to receive your feedback.

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