Bank of England policymakers have said that the public is right to be angry over bank bailouts and the economic difficulties facing Britain’s younger generation.
Speaking at the Bank of England’s Future Forum in Liverpool, deputy governor Sam Woods said that the amount of public money pumped into failing banks during the last financial crisis was “a terrible thing”.
“One way to think about that is, back in 2008 – and I was in the Treasury at the time involved in this – we put £66 billion into two of our banks. That’s £1,000 for every person in the country.
“Now another way to think about it is it happens to be about the same number as all of the notes, all of the currency in circulation in this country – that amount was put into two banks.
“That is a terrible thing,” he said.
The Bank of England senior staff attend the Future Forum 2017 at St George’s Hall, Liverpool (PA)
However, he said that the Bank was making headway in ensuring that the public purse would not have to be plundered in order to save failing lenders.
“A lot of the work that we’ve been doing over the past decade is to change the system and make it stronger… such that next time we have a financial crisis or a firm gets into difficulty, we’ve got more options and it’s not just the taxpayer having to write a cheque.”
But Sir Jon Cunliffe, the Bank of England’s deputy governor for financial stability, stressed that the bailouts were not made for the bankers’ benefit.
“It’s important to remember we put that money into the banks, not to save the bankers, but to save the economy from the bankers.”
Mark Carney holds a credit card as he speaks to guests during the Future Forum (PA)
“And we had to do it because if the banks collapsed, people wouldn’t have been able to use banks, get a hold of the money in their accounts, lending would have collapsed.
“We didn’t want to do it, and the whole point of the financial stability objective, the thing that I do, is to make sure it didn’t happen again.”
Sir Jon said it was understandable that young people were upset that the actions of previous generations have left them in a more difficult economic environment.
“I think a lot of the anger is well justified,” he said.
A recent report by the influential Resolution Foundation think tank said the Chancellor should use any spare cash he has to address the poor economic prospects facing young “millennials” when he sets out his budget plans on November 22.
It has proposed scrapping the four-year freeze on working age benefits which came in last year.
It calculated that 56% of the gains from unfreezing benefits from next April would go to millennials, born in the 1980s and 1990s.
For a low-income family with two children that would mean an extra £315 a year while the cost to the Exchequer would be £1.9 billion in 2018/19.