People's Quantitative Easing

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".{{cite web |url=http://www.londonlovesbusiness.com/business-news/politics/corbynomics-what-on-earth-is-jeremy-corbyns-economic-policy/10787.article |title=Corbynomics - what on earth is Jeremy Corbyn's economic policy? |access-date=14 September 2015 |archive-date=11 September 2015 |archive-url=https://web.archive.org/web/20150911032546/http://www.londonlovesbusiness.com/business-news/politics/corbynomics-what-on-earth-is-jeremy-corbyns-economic-policy/10787.article |url-status=dead }}. London Loves Business. Retrieved on 12 September 2015.{{cite news |url=https://www.telegraph.co.uk/finance/economics/11862318/What-are-we-to-think-of-Jeremy-Corbyns-peoples-QE.html |title=What are we to think of Jeremy Corbyn's 'people's QE'? |first=Roger |last=Bootle |author-link=Roger Bootle |newspaper=Daily Telegraph |date=13 September 2015 |accessdate=17 September 2015}}

The policy is based on ideas put forward by Richard Murphy.{{cite news |url=https://www.theguardian.com/politics/2015/sep/22/richard-murphy-corbynomics-tax-social-housing-britain |title=Can Corbynomics guru Richard Murphy fix Britain? |author=Zoe Williams |newspaper=The Guardian |date=22 September 2015 |accessdate=23 September 2015}} 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.{{cite news |url=http://www.theaccountant-online.com/features/corbynomics-everything-you-always-wanted-to-know-about-it-explained-by-richard-murphy-4654295/ |title=Corbynomics: Everything you always wanted to know about it, explained by Richard Murphy |author=Carlos Martin Tornero |newspaper=The Accountant |date=24 August 2015 |accessdate=26 September 2015}}{{Dead link|date=June 2025}}

The policy was criticised by other leadership candidates, who claimed it was 'economically illiterate'{{cite news|url=https://www.theguardian.com/politics/2015/aug/13/yvette-cooper-jeremy-corbyn-policies-not-credible-labour |title=Yvette Cooper says Labour rival Jeremy Corbyn's policies not credible or radical}} and would increase the risk of investing in the UK.{{cite news|url=https://www.bbc.co.uk/news/business-33884836|title=Would Corbyn's 'QE for people' float or sink Britain?|date=12 August 2015|work=BBC News}} 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.{{cite news|url=https://www.telegraph.co.uk/finance/bank-of-england/11804324/Jeremy-Corbyns-Peoples-QE-would-force-Britain-into-three-year-battle-with-the-EU.html |title=Jeremy Corbyn's 'People's QE' would force Britain into three-year battle with the EU | location=London | work=The Daily Telegraph |first=Peter |last=Spence |date=15 August 2015}}{{citation |url=http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-the-functioning-of-the-european-union-and-comments/part-3-union-policies-and-internal-actions/title-viii-economic-and-monetary-policy/chapter-1-economic-policy/391-article-123.html |title=The Lisbon Treaty Article 123 |access-date=14 September 2015 |archive-url=https://web.archive.org/web/20150822111902/http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-the-functioning-of-the-european-union-and-comments/part-3-union-policies-and-internal-actions/title-viii-economic-and-monetary-policy/chapter-1-economic-policy/391-article-123.html |archive-date=22 August 2015 |url-status=dead }} 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.{{cite web |url=https://www.telegraph.co.uk/finance/economics/11862318/What-are-we-to-think-of-Jeremy-Corbyns-peoples-QE.html |title=What are we to think of Jeremy Corbyn's 'people's QE'?}}

On 3 August 2015, Labour's shadow chancellor, Chris Leslie, criticised the proposal on the grounds that it could provoke higher inflation and interest rates.{{cite news |url=https://www.theguardian.com/politics/2015/aug/03/jeremy-corbyn-economic-strategy-would-keep-tories-in-power-chris-leslie |title=Corbyn's economic strategy would keep Tories in power, top Labour figure says |author=Nicholas Watt |newspaper=The Guardian |date=3 August 2015 |accessdate=20 September 2015}}

However, economist Robert Skidelsky offered a qualified endorsement of Corbyn's proposals to carry out PQE through a National Investment Bank,{{cite news|url=https://www.theguardian.com/politics/2015/aug/14/the-labour-party-stands-at-a-crossroads|title=The Labour party stands at a crossroads|date=14 August 2015|work=The Guardian}}{{cite news|url=https://www.theguardian.com/business/2015/aug/19/corbynomics-why-we-should-take-it-seriously|title=Why we should take Corbynomics seriously|first=Robert|date=19 August 2015|newspaper=The Guardian|author=Skidelsky|accessdate=20 September 2015}} and both The Guardian and the Financial Times have published articles complimenting the idea.{{Cite web|url = http://ftalphaville.ft.com/2015/08/06/2136475/corbyns-peoples-qe-could-actually-be-a-decent-idea/|title = Corby's "People's QE" could actually be a decent idea|date = 6 August 2015|accessdate = 20 August 2015|last = Klein|first = Matthew|website = Financial Times Alphaville}}{{cite news|url=https://www.theguardian.com/commentisfree/2015/sep/04/corbynomics-radical-mainstream-economic-orthodoxy|title=Corbynomics sounds subversive, but maybe not for long|last=Clark|first=Tom|date=4 September 2015|work=The Guardian}} The Guardian also published an article by Tony Yates, economist at Birmingham University critical of the proposal. Yates suggested it could encourage reckless spending by governments to finance "pet projects" and could encourage governments to print money to finance pre election booms followed by austerity after a government is reelected and could fuel extreme inflation. Yates is further concerned that high inflation and economic uncertainty tends to hit poor people hardest.{{Cite news|url=https://www.theguardian.com/business/economics-blog/2015/sep/22/jeremy-corbyn-qe-for-the-people-jeopardises-bank-of-england-independence|title=Corbyn's QE for the people jeopardises the Bank of England's independence|last=Yates|first=Tony|date=22 September 2015|newspaper=The Guardian|language=en-GB|issn=0261-3077|access-date=2016-10-06}} The Independent published an article arguing that a limited amount of PQE would usefully increase employment and inflation, reducing the burden of debt accumulated since the 2008 financial crisis.{{cite news |url=https://www.independent.co.uk/voices/comment/peoples-quantitative-easing-may-be-the-best-way-to-undo-the-mistakes-of-the-first-round-of-qe-10501479.html |archive-url=https://ghostarchive.org/archive/20220525/https://www.independent.co.uk/voices/comment/peoples-quantitative-easing-may-be-the-best-way-to-undo-the-mistakes-of-the-first-round-of-qe-10501479.html |archive-date=25 May 2022 |url-access=subscription |url-status=live |title=People's Quantitative Easing may be the best way to undo the mistakes of the first round of QE |author=George Cooper |newspaper=The Independent |date=15 September 2015 |accessdate=19 September 2015}}

The Daily Telegraph reported that HSBC's chief economist, Stephen King, and Standard Life's senior international economist, Jeremy Lawson, support policies such as People's Quantitative Easing should the economy move into another downturn despite the use of traditional quantitative easing (QE) policies.{{cite news |url=https://www.telegraph.co.uk/finance/economics/11869701/Jeremy-Corbyns-QE-for-the-people-is-exactly-what-the-world-may-soon-need.html |title=Jeremy Corbyn's QE for the people is exactly what the world may soon need |first=Ambrose |last=Evans-Pritchard |author-link=Ambrose Evans-Pritchard |newspaper=Daily Telegraph |date=16 September 2015 |accessdate=17 September 2015}}

In August 2015, Corbyn stated he had had messages of support on his economic policies in general from economists Paul Krugman and Joseph Stiglitz.{{cite news |url=https://www.cnbc.com/2015/08/18/peoples-qe-left-wing-leaders-plans-for-the-uk.html |title=.People's QE?. Left-wing leader's plans for the UK |author=Catherine Boyle |publisher=CNBC News |date=18 August 2015 |accessdate=20 September 2015}}

Following the formation of the Economic Advisory Committee, announced on 27 September 2015 at the Labour Party Conference in Brighton, then BBC News Economics Editor Robert Peston contended that the composition of the panel, which included Simon Wren-Lewis and Joseph Stiglitz, signalled that the policy was probably dead, as he felt that while this particular group of economists would, "back the notion of the government taking advantage of prevailing low interest rates to borrow considerably more for investment in infrastructure," they would not support the ultra formulation of the policy, "for fear that the anti-inflationary credentials of the Bank of England would be destroyed", and that if the policy survived it would be as, "a contingent rainy-day monetary tool, for when the economy is next in direst straits."{{cite news|url=https://www.bbc.co.uk/news/business-34376085|title=Corbynomics' Thatcher moment|last=Peston|first=Robert|date=27 September 2015|work=BBC News|accessdate=11 March 2016}}

In February 2019, the New Statesman claimed People's Quantitative Easing was evocative of Modern monetary theory.{{Cite web|url=https://www.newstatesman.com/politics/economy/2019/02/surprise-cult-modern-monetary-theory|title=The surprise cult of Modern Monetary Theory|date=20 February 2019}}

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• Development finance institution
• European Investment Bank
• Fiscal policy
• Government bond
• Government investment pool
• Government spending
• Monetary policy
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• Public infrastructure
• Scottish National Investment Bank

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Category:Economic history of the United Kingdom