The Bank of England’s policy of pumping money into the economy has been a “monumental mistake”, pensions experts have warned .
A committee of MPs heard that measures taken by the Bank to drive the economy had backfired by squeezing individuals’ incomes – both pensioners and those in work – and forcing companies to divert cash into pension funds rather than investing.
Ros Altmann, pensions expert and director general of Saga, said current policies devalued pensioners’ incomes, making them less willing to spend: “Quantitative easing and ultra-low interest rates have hampered the spending power of those in the economy who were not over-indebted and who would otherwise have spent money.”
By pumping money into the system, QE also drives up prices, which hits consumer demand. Simon Rose of the campaign group Save our Savers, said: “QE is an inflationary policy, as [the bank admits]. With inflation running higher than the increase in wages, it’s not just pensioners, everybody is feeling the pinch.”
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