Darling 'mulls money printing plan' (From Penarth Times)

Darling 'mulls money printing plan'

10:04am Thursday 8th January 2009

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Speculation is mounting that the Government is preparing to print billions of pounds of money to help boost the economy.

Chancellor Alistair Darling indicated during an interview that he is considering a policy of "quantitative easing" - or printing money - to ease the impact of a recession.

Any such move would require the Government to work "hand in hand" with the Bank of England, he added in his first explicit comments on the issue.

Shadow chancellor George Osborne accused Mr Darling of floating the idea "carelessly" in a move that risked losing confidence of international markets.

The prospect of printing money came ahead of an expected cut in interest rates by the Bank of England later, which would take the current 2% base rate to its lowest point for 300 years.

Treasury and Bank officials are considering other financial measures if the cheaper official borrowing costs fail to have the desired effect of boosting economic activity.

Mr Darling told a newspaper: "Frankly, if you were to do anything further (than set interest rates close to zero) this is something that could only be done with the Treasury and the Bank of England working hand in hand, because the two responsibilities just become so close you have to operate together."

Extra government cash could be used to buy assets such as government or commercial debt, or private equities. The policy was used by Japan several years ago to stave off deflation - a general trend of falling prices which can lead to economic paralysis.

Treasury sources confirmed that the Chancellor is "looking at all options" to help stimulate the economy.

Mr Osborne said printing money was the "last resort of desperate governments".

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