People's Quantitative Easing

People's Quantitative Easing (PQE) is a policy proposed by Jeremy Corbyn during the 2015 Labour leadership election, which would require the Bank of England to create money to finance government investment via a National Investment Bank.

Corbyn proposes to have the Bank of England create money to invest in housing and public transport, described by Corbyn as "People's Quantitative Easing". This would aim to turn the UK into a high-skill, high-tech economy and to build more council houses in order to lower long-term housing benefit costs. To achieve this, the Bank would purchase bonds for a state-owned "National Investment Bank".

The policy is based on ideas put forward by the political economist Richard Murphy. Murphy argues it is a policy designed for use in 2020, in the event the economy remains flat despite traditional quantitative easing, with low inflation, low interest rates, high unemployment and low wages. If the economy is growing strongly, PQE would not be needed as increasing tax revenues would pay for necessary investment.

Economics professor Simon Wren-Lewis explains that the difference between PQE and Milton Friedman's helicopter money (which some people also call "QE for the People") is that instead of central banks distributing newly created money directly to individuals, creating consumption demand without involving government, PQE finances investment projects that are to some extent at least initiated by government. So PQE impinges on central bank independence.

The policy was criticised as economically illiterate by other leadership candidates and would be seen as increasing the risk of investing in the UK. It would also clash with Article 123 of the EU's Lisbon Treaty which prevents central banks from printing money to finance government spending and could cause a legal battle with the European Court of Justice.The Daily Telegraph wrote that as quantitative easing had the potential to cause inflation; currently the Bank of England holds onto the money it creates and thus has the power to 'unwind QE' by reversing it, whereas if the money had gone into a National Investment Bank, this would not be possible.

...
Wikipedia