Monetary policy shift announcement expected in Autumn Statement


A major change in economic policy away from quantitative easing is expected to be announced in the Autumn Statement, with Theresa May having criticised its "bad side effects".

The Prime Minister is said to be backing a move away from monetary policy like quantitative easing and low interest rates towards more fiscal measures, such as tax and spending.

Reports on BBC Newsnight suggest the policy could be unveiled as early as the Autumn Statement.

This was seemingly confirmed by Tory MP George Freeman, chairman of the Prime Minister's policy board.

Mr Freeman told Newsnight: "Philip Hammond is going to set this out in the Autumn Statement, but Theresa has been very clear this model of the emergency QE package, bail out the banks, stabilise the economy, has had a very profound effect on distribution of wealth.

"Those with assets have done very much better than those without. We have to listen to the roar that we heard this year."

Mr Freeman said the Government was "looking at all the mechanisms to make sure money flows properly", in order to develop infrastructure and its industrial strategy.

He added: "We are asking the question.

"If we're going to build a model of economic growth that's more urgent, creates more opportunities, creates for people hope that through this pain of getting out of this debt crisis there is growth and sustainable growth for tomorrow, and that the people and places that have been left behind can see infrastructure and opportunity.

"She's signalling loud and clear that we need to make sure we understand what effect this model of growth has had on those that are paying for it."

Monetary policy is set by the Bank of England, which is independent of government.

In her conference speech, Mrs May said: "Because while monetary policy - with super-low interest rates and quantitative easing - provided the necessary emergency medicine after the financial crash, we have to acknowledge there have been some bad side effects.

"People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer.

"A change has got to come. And we are going to deliver it."

Quantitative easing, which introduces new money into the money supply through a central bank, was done in the wake of the 2008 financial crisis.

A fresh round of quantitative easing was also announced after Britain voted to leave the European Union.

Bank of England analysis of quantitative easing in 2012 showed the wealthiest 5% had seen an increase of £185,000 and that the bottom 50% received no increase in their wealth because they did not have assets.