Osborne: Rich richer because of monetary policy

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George OsborneImage source, Bloomberg TV

The rich have become richer because of the UK's policies of low interest rates and quantitative easing, former Chancellor George Osborne has said.

Talking to Bloomberg TV, he said that UK monetary policy had made "life difficult for ordinary savers".

The policies were brought in after the banking crisis of 2008 and the subsequent recession.

He said the policies had been "very necessary" to keep the economy strong, but their impact had to be mitigated.

It is not a novel observation that the UK's monetary policy has largely benefitted the wealthy, via higher share prices and higher house prices, and disadvantaged savers who are now earning hardly anything at all on their savings.

But while he was chancellor, until his recent sacking by new Prime Minister Theresa May, Mr Osborne's emphasis was always on the necessity of staving off recession and keeping the economy growing.

Today he said: "We need to offset the very necessary loose monetary policy, and the distributional consequences that is having. Essentially it makes the rich richer and makes life difficult for ordinary savers."

When asked about public attitudes, as revealed by the June Brexit referendum result in the UK and support for the Republican presidential candidate Donald Trump, Mr Osborne said: "All of us who believe in free markets, in our democratic institutions, need to work harder to find an answer to the anger people clearly feel out there."

Separately, former Greek finance minister Yanis Varoufakis has described Mr Osborne as "hapless".

Speaking outside a conference of the Institute of Directors, he said that Mrs May and her new Chancellor, Philip Hammond, should abandon the austerity policies pursued by Mr Osborne.

"The obvious thing to do for a successor of such a hapless chancellor is to stop pushing the rock up the hill," Mr Varoufakis said.

'Too early to say'

The former UK chancellor was in the forefront of the defeated Remain campaign during the Brexit referendum but unlike his former boss, David Cameron, he is staying on as a Conservative MP.

Mr Osborne argued on Bloomberg in favour of a negotiating a "softer Brexit rather than a harder Brexit" when asked about the referendum outcome.

"We need the strongest possible ties in trade to mitigate the effects of Brexit," he said.

He said no-one had perfect answers to what the UK's relationship with the rest of Europe would look like in the future.

And he added that Brexit negotiations should wait until both Germany and France had staged their forthcoming national political elections later this year.

He denied that he had got it wrong with his "Project Fear" predictions during the referendum campaign, pointing out that the pound had subsequently been devalued and that several forecasts for economic growth had been downgraded.

"It is too early to say what economic consequences of Brexit will be," Mr Osborne said, adding that the long-term consequences depended on future decisions taken as part of the Brexit negotiations.

Asked if Mr Hammond should pursue a path of more austerity and an emergency Budget, something Mr Osborne had previously warned might be necessary if the UK voted to leave the EU, the former chancellor simply stated that slower economic growth meant fewer resources and that this would lead in turn to "hard decisions".

He went on to say of Mark Carney, the governor of the Bank of England, that "we've got the best in the world" and that "he's a brilliant governor".

Invited to say who he supported in the US presidential election after last night's TV debate, Mr Osborne pointed out that he did not have vote, but said: "I don't think the answers that Donald Trump put forward, closing America off from the rest of the world [and] erecting trade barriers, are going to create jobs in America, or are good for the world more generally."