View more on these topics

Prudential chief exec warns Carney to halt QE or put recovery at risk

Bank of England BoE Bank 480

Prudential chief executive Tidjane Thiam has warned the incoming Bank of England governor Mark Carney that Britain is at risk of more economic turmoil unless quantitative easing is brought to a halt.

Thiam reportedly warned Carney that QE is an “amazing distortion” and while it was the correct policy to pursue in the immediate aftermath of the crisis, the governor should not increase the size of the programme.

According to the Telegraph Thiam, speaking at a private breakfast, said: “QE was a good short-term fix. In 2008, 2009 and 2010 it was the right answer. But now, it is different.

“We are just storing long term trouble by minimising short term pain.”

Thiam warned QE is having a negative effect on growth and damaging savers and said reliance on cheap money without a sensible exit plan would leave the door open for inflation shocks, which would throw the economy off course.

He said: “In the macro economy: savings equal investments. But QE is depressing savings and therefore depressing investment. This means, QE is depressing growth.

“It is a really strange economic strategy because everyone is looking for growth – but the monetary policy is completely anti-growth. There is no other exit to indebtedness than growth.”

So far the BoE has created £375m of money through QE since it first launched the programme in March 2009.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com