Investment Special: The great savings robbery

The prudent among us can’t expect much reward from the Budget

Three years ago, when the Bank of England embarked on its first £200 billion round of quantitative easing (QE), most of us — including some Bank officials — hadn’t a clue how this relatively untried policy would work. There were dire predictions from monetarist critics that ‘printing money’, as it was colloquially called, could only result in Zimbabwe-style inflation.

That prediction has so far not been realised, largely because the economy has been operating so far below potential and the repair work, after Labour’s great boom of 1997-2007, is still going on. In that period banks, corporations, private equity spivs, households and sovereign nations loaded themselves up with cheap debt. But when the wheels came off in 2008, supplies of credit went into reverse, corporations and households started to jettison debt, and growth in the money supply came to a grinding halt.