Debt Management, Savings and Quantitative Easing

Posted on: February 9, 2012

Debt management is top of the agenda for the majority of British households, as is debt recovery. Saving money, reducing outgoings and spending has also become a priority for many. Unfortunately “good housekeeping” is also creating a negative impact on the UK’s economic recovery. The uncertain outlook and weak economy has led to a decision by the Bank of England to increase the QE programme by a further £50bn. Having already printed £275bn of new money and reducing interest rates to 0.5%, in an attempt to kick start the economy, a further £50bn will now be printed.

Whilst many households are struggling with debt and ever increasing bills, many pensioners will also suffer further from the latest QE round and in real terms become poorer. With higher living costs and lower interest rates on savings accounts, many retired people will struggle to manage their finances and will have much less to spend. Those people who are about to retire may also receive lower than expected pensions, leading to far less than expected to live on. The impact of QE on pensioners may also contribute to lower growth rates and with inflation rates currently at 4.2%, printing new money could maintain this level or even increase it further. The big challenge is how to boost the economy and improve growth levels with the further £50bn being printed, time will tell if it works.