The fragile finances of families, savers and pensioners suffered a huge blow yesterday when the Bank of England launched a desperate new bid to stave off recession.
The Bank’s governor pumped £75billion of new money into the flatlining economy, saying the worst financial crisis in modern history demanded it.
But Sir Mervyn King admitted there could be a severe price to pay.
The move could:
- Force another spike in inflation, with retail prices predicted to hit 5 per cent within weeks;
- Further reduce annuity rates for pensioners;
- Hammer savers, offering them little hope of a return on their investments.
The Bank decided to restart its programme of quantitative easing in the face of growing fears of a double-dip recession exacerbated by the eurozone debt crisis.
Sir Mervyn expressed sympathy for savers but insisted he would not ‘push Britain into a recession’ just to help them.
‘I would desperately like to get back to a world as soon as possible with normal levels of interest rates we need to encourage people to save,’ he added.
‘I have enormous sympathy with the predicament that savers, and particularly those who are retired, face. They are suffering from the consequences of an economic crisis which they did not cause or are responsible for.