Taking easing to the people

By Mark Broad
Economics producer, BBC News

Charlie Bean: 'Some early positive signs but I wouldn't want to oversell them'

"We're not actually printing money," insists Charlie Bean, the deputy governor of the Bank of England, leaning gently into the microphone.

It might be early on a Monday morning in a local radio studio, but the push to explain the policy of quantitative easing (QE) to the public has already started.

Mr Bean is in Leeds on the first leg of a tour of the UK, attempting to explain what the Bank calls its "conventional unconventional" measure to counter the recession.

Armed with a box of explanatory pamphlets, optimistically entitled Quantitative Easing Explained, he is on a single-handed mission to the world of gilt yields, money velocity and commercial paper to the people.

"The first stop is here in Leeds, then I'm in Newcastle and tomorrow I'm in Edinburgh," he says.

Sounding not unlike an ageing rock star on a valedictory tour, Mr Bean explains the lengths at which the bank is going to explain the £125bn QE policy to the nation.

"Obviously the economy is experiencing a very sharp downturn the moment and we've reacted to that with a policy that goes under the rather obscure title of quantitative easing," he says.

"Because it's an unconventional policy, we thought it appropriate to get out round the country and explain what it is we're trying to achieve."

Mattresses and money

The deputy governor's first stop takes him to the sprawling warehouses that make up the premises of Harrison Spinks Beds.

A lot of my friends have lost their jobs and not been able to find another. Many have now gone back home to Poland Frederick Czajkwoski, bedmaker

By taking the temperature at businesses like this, Mr Bean hopes to work out if the bank's policy of pumping billions into the economy is beginning to ease the severity of the recession.

Leading the deputy governor around mountains of mattress filler and headboards is the managing director of the company, Simon Spinks.

"Clearly all this money the Bank has pumped in will filter through to consumers and hopefully, they will then spend it.

"But I think that any recovery will be pretty slow," says Mr Spinks.

"I do worry about the long-term damage that it might bring in terms of inflation," he adds.

"When all this money goes back, I think inflation could really pick up and that's something that I'm not sure many businesses are ready for."

Sitting on a bench eating his lunch, just along from the group of besuited men, is bedmaker Frederick Czajkwoski, a 27-year-old from Poland.

For him, the talk of the green shoots of economic recovery seems a long way off.

"A lot of my friends have lost their jobs and not been able to find another. Many have now gone back home to Poland," he says.

Mr Czajkwoski is happy that he's managed to keep his own job but has says that he's increasingly seeing the effects of the recession on friends and relatives.

Money 'not getting through'

The next stop on the deputy governor's QE roadshow is a presentation on the progress of the economy to local business leaders.

I think it might be difficult to answer the question, 'Was quantitative easing effective?' Charlie Bean

The meeting has the feel of a rather sleepy A-Level economics lesson, as Mr Bean runs through a number of bar-charts and bullet-points on how QE works.

After the deputy governor has finished, many of the attendees take the opportunity to question him on whether the policy is actually making a difference.

"The money is not getting down to where it's needed," says Margaret Wood, from a small manufacturing firm in Wakefield.

"'It's not getting down to the grassroots and it's not getting down to the small businesses that need it to trade," she says.

Four months and more than £100bn later, many are keen to see what effect the QE policy has had, but according to the deputy governor, we need to remain patient.

Too early for conclusions

"I don't think we should be trying to draw conclusions from this until at least a year down the road," he says.

Mr Bean has been getting a feel for the real economy

"Even then, I think it might be difficult to answer the question, 'Was quantitative easing effective?'. Because to answer that, you need to know what would have been the effect without it."

And he is confident that although the initial indications of success have been muted, the policy is beginning to make a difference.

"There are signs that the rate of money growth may be picking up and that that might be starting to seep into the corporate sector," says Mr Bean.

"But I would not want to oversell them at this juncture."

And on this cautious note, the QE bandwagon is off again as Mr Bean heads off for his next appointment in Newcastle.

The deputy governor seems to have convinced people that he is not simply printing money, but they don't seem quite so certain that the policy is actually working.