By Claire West

Members of the UK200Group of independent accountancy and lawyer firms have commented on calls from Bank of England Monetary Policy Committee Member Adam Posen for more Quantitative Easing to reduce the risk of deflation or economic depression in the future:

Jonathan Russell, partner, ReesRussell and vice-president UK200Group:

“Quantitative easing can only work if the money released actually gets through to the economy. In part it is in line with the comments earlier this week that we need people to spend some of their savings.

“The banks are saying that part of their problem over lending is not just their increased hurdles but also that many businesses are not even approaching them to borrow. Our economy is ultimately driven by consumer spending so we have to create an environment where that will happen.

“The very low interest rates are to a degree to discourage saving and encourage spending rather than necessarily make borrowing cheaper. If further quantitative easing leads to increased spending then it will help but if it just helps secure greater comfort then it will not.”

David Ingall, partner, JWPCreers:

“The problem is that the experts cannot agree amongst themselves. It’s a bit like everyone being allowed to have a go at brain surgery. Everyone knows the theory but in the real world the consequences of getting it wrong can be devastating.

“Yesterday’s message about spending your savings is much the same. The problem is that QE will have longer term consequences for the country as a whole. Spending savings will have longer term consequences for individuals. Perhaps the message is that you should spend your savings because the QE will generate inflation which will devalue them.

“Should something be done? Is deflation more harmful than inflation? Are low interest rates beneficial to our economy? What will happen if rates go up? Put on the blindfold, find the pin and take your choice.”