Bank of England attempts to spur spending draw criticism

Economists have expressed surprise at comments made this week that suggest the Bank of England is trying to discourage Britons from adding to their savings.

Charles Bean, deputy governor of the Bank of England, told Channel 4 News that encouraging spending, rather than saving, is an integral part of monetary policy.

He added that the direct aim is to promote business spending - but that spurring household spending as well can form one element of the Bank's economic activities.

But his comments have met with opposition from some economists, particularly in areas of society where the interest earned on saving forms a significant part of individuals' income.

Independent pensions policy adviser Dr Ros Altmann points out that, while interest rates have fallen, inflation has risen to almost five per cent on the retail prices index.

Mr Bean told Channel 4 News: "Savers shouldn't necessarily expect to be able to live just off their income in times when interest rates are low; it may make sense for them to eat into their capital a bit."

News Source: http://www.myfinances.co.uk/