Darling denies printing money plan (From Penarth Times)

Darling denies printing money plan

11:24am Thursday 8th January 2009

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Chancellor Alistair Darling has moved to quash speculation that he was planning to print money to ease the impact of recession.

He told reporters during a visit to Liverpool: "Nobody is talking about printing money. There's a debate to be had about what you do to support the economy as interest rates approach zero, as they are in the United States. But for us that is an entirely hypothetical debate."

He added: "We are looking at a range of measures to support the economy, to support business and to help people. But nobody is talking about printing money."

He was speaking out after a comment he made in a newspaper interview prompted speculation that the Government was preparing to print billions of pounds of money to help boost the economy.

In the interview published on Wednesday in the Financial Times, Mr Darling said he was considering a policy of "quantitative easing".

Any such move would require the Government to work "hand in hand" with the Bank of England, he added.

Mr Darling told the FT: "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.

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

A cut in interest rates by the Bank of England is expected 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.

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