Tory MPs attack £35bn Govt raid on QE programme

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Conservative MPs have lashed out at the Government for indulging in “fiscal alchemy” and “fantasy” over its decision to transfer £35bn from the Bank of England to the public purse.

Last week, the Treasury revealed it will transfer the cash pile that has built up in the Bank’s Asset Purchase Facility from interest payments for gilts bought through quantitative easing, which will total £35bn next year.

The Government will then receive the debt interest payments on a quarterly basis.

The Bank of England has now purchased £375bn worth of gilts through QE since starting the money printing process in 2009.

Tory MP for Wycombe Steve Baker says: “It is a fantasy where the Government passes money between its various arms. Quantitative easing is a very, very dangerous game and it is very dangerous if the Government comes to rely on the circulation of debt interest payments through the Bank of England and back to the Treasury.”

Conservative MP for Clacton Douglas Carswell blast the current “absurd” monetary policy and Government “hubris” over low borrowing figures.

He says: “Shuffling money from a savings account to a current account tells us more about the Mickey Mouse economics involved than it does about the state of our finances.

“You can change the laws of accounting to create whatever kind of fiscal alchemy you want, it is not going to change the laws of financial gravity.”

Shadow Treasury chief secretary Rachel Reeves has slammed the move as “smoke and mirrors”, claiming people will want to see the real borrowing figures at the autumn statement on 5 December.