Hedge fund boss backs Corbyn’s plan for People’s QE

Paul Marshall, co-founder of London-based Marshall Wace, gave qualified backing for Mr Corbyn’s advocacy of so-called “people’s quantitative easing” to boost the economy by funding infrastructure projects. He said if used correctly it would “carry quite a lot of respectability”.

Mr Marshall’s remarks in a Financial Times article were backed by Liberal Democrat former business secretary Sir Vince Cable.

The Bank of England has already used a form of QE effectively to print money to fund bond purchases, to the tune of £375bn. Together with low interest rates, this loose monetary policy is designed to ease credit conditions and prop up the recovery.

In an article, Mr Marshall acknowledged that the policy had in practice made banks - and anyone with assets - richer and that all of those working in financial markets “owe a debt to QE”.

He added: “It is no surprise that the left is angry about this, nor that they are looking for other versions of QE that do not so directly benefit bankers and the rich.”

Mr Marshall warned that the type of QE advocated by Mr Corbyn to improve housing and infrastructure would be “flawed” at the moment and risk stoking inflation.

“But if the idea were kept as something to implement the next time the country faces a financial crisis, it would carry quite a lot of respectability,” he said.

Sir Vince said: “Paul Marshall is right. People’s quantitative easing has a role but only in crisis and slump.”

Bank of England governor Mark Carney, questioned about the implications of this kind of policy, has said it could imperil price stability, with the potential for rising inflation which would hit the poor and the elderly the hardest.