Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • July 2012
07

Bank of England announces fresh bout of QE

Open-access content Thursday 5th July 2012 — updated 5.13pm, Wednesday 29th April 2020

The Bank of England has announced a further £50bn of quantitative easing in a bid to help reinvigorate the UK economy.

2

Today's announcement by the Bank's Monetary Policy Committee takes the total amount of money pumped into the economy under the Bank's asset purchase programme to £375bn. The Bank also held interest rates at 0.5%.

In a statement the Bank said the stimulus was needed to address the impact of the eurozone crisis on the UK and the risk that inflation will miss medium-term targets.

'Against the background of continuing tight credit conditions and fiscal consolidation, the increased drag from the heightened tensions within the euro area meant that, without additional monetary stimulus, it was more likely than not that inflation would undershoot the target in the medium term,' it said.  

Joanne Segars, chief executive of the National Association of Pension Funds, said the extra dose of QE would only make the already difficult situation facing schemes even 'tougher'.

'The economists might argue about whether QE works, but there is no doubt that it short-changes businesses running final salary pensions, and people who are about to retire.

'QE worsens the yield on gilts, which increases the deficits of final salary pension funds and means people get a worse rate on their annuity. Those who are retiring could be locked into a weaker pension for the rest of their days.'

She added: 'Businesses will be forced to divert more money from jobs and investment into filling black holes in their pension funds. Our fear is that many will choose to close these pensions altogether, further weakening the UK's ability to save for its old age.'

Ms Segars said that after three years of QE, the Bank of England should now provide more evidence that it was working, and participate in a debate on its benefits.

Nida Ali, economic advisor to the Ernst & Young ITEM Club, said the latest round of QE was to be expected given recent downbeat outlooks for the UK economy.

'The drop in inflation in May and downbeat PMI surveys for June meant that the implementation of additional QE in July was almost a foregone conclusion,' she said.  
'We remain strongly in favour of looser monetary policy, not just through additional QE but also more unconventional means. In this regard, we support the schemes introduced last month, which are aimed at lowering banks' borrowing costs and increasing the amount of liquidity available to them.'

 

This article appeared in our July 2012 issue of The Actuary .
Click here to view this issue

You may also be interested in...

2

Soapbox: sit tight for a bumpy ride

Naz Peralta looks at how the current uncertainty in the eurozone is playing havoc with defined-benefit pensions in the UK
Thursday 5th July 2012
Open-access content
2

Preparing for Basel III

Ben Gunnee says the new rules could push up costs and hit the operations of European pension funds using over-the-counter derivatives
Wednesday 1st August 2012
Open-access content
ta filler

Reinsurance rate rises 'due to losses, not hardening market'

Reinsurance rate increases in the North American and global markets are a sign of loss activity rather than hardening markets, Willis Re said yesterday.
Tuesday 3rd July 2012
Open-access content
2

Eurozone insurers 'won't return to profit until 2015 at earliest'

Low interest rates and investment returns, low business volumes and more onerous capital requirements all mean that the Eurozone insurance industry is not expected to return to profitability until 2015 at the earliest, Ernst & Young said today.
Monday 2nd July 2012
Open-access content
ta

Alternative assets under management 'nearly $5trn globally'

The total value of alternative assets under management on behalf of institutional investors has reached nearly $5 trillion worldwide, according to research published by Towers Watson today.
Monday 9th July 2012
Open-access content
ta filler

US severe weather 'cost insurers almost $2bn in June'

A host of severe weather events in the US last month cost insurers $2bn while natural disaster impacts in China caused an estimated $3.5bn worth of damage, Aon Benfield said today.
Tuesday 10th July 2012
Open-access content

Latest from Investment

KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content
cj

Natural capital investing

Chris Howells and Andrew Dreaneen discuss how today’s investments in natural capital profit portfolios as well as the planet and humanity
Wednesday 1st February 2023
Open-access content
t

Options open on making portfolios more climate-friendly

Michael Sher sets out the option savailable to investors who are looking to improve their portfolios’ climate credentials
Wednesday 2nd November 2022
Open-access content

Latest from July 2012

2

CEO's comment: Racing start for public affairs

Derek Cribb explains how reinvigorating research offers the key to thought leadership
Wednesday 3rd October 2012
Open-access content
2

CEO's comment: Going for a global gold

Derek Cribb explains why education is key to a universally successful future for the Profession
Friday 3rd August 2012
Open-access content
2

President's comment: A blooming vision

Having watched the seeds being planted, Philip Scott now wants to see the actuarial profession blossom and grow
Thursday 2nd August 2012
Open-access content

Latest from formbuilder_item_removed

2

Implementing IFRS 17 Discount Curves: Theoretical and Practical Challenges

The International Financial Reporting Standard (IFRS) 17 requires liability cash flows to be discounted at rates that reflect the characteristics of the cash flows, including their liquidity
Tuesday 3rd September 2019
Open-access content
2

Profit Emergence Under IFRS 9 and IFRS 17: The impact of choice of liability discount rate

With the IFRS 17 accounting standard, insurers need to understand the patterns of profit emergence that arise under the standard, and how current business and methodology decisions affect such patterns.
Wednesday 10th July 2019
Open-access content
2

Whitepaper: Aggregation and diversification of the IFRS 17 Risk Adjustment

This paper forms part of a series of high-level papers designed to provide an introduction to different features of the risk adjustment that should be considered in advance of implementation.
Tuesday 29th January 2019
Open-access content

Latest from 07

Insurers 'need better Solvency II know-how at board level'

Insurance companies have been urged to do more to educate their boards about Solvency II after KPMG research found that only one in five boards have received more than 15 hours training on the new European rules.
Thursday 26th July 2012
Open-access content
ta filler

Over half of European firms 'ill-equipped for terrorist threat'

More than half of European companies feel underprepared to deal with the threat of terrorism and political violence, according to research published yesterday by Ace European Group.
Wednesday 25th July 2012
Open-access content
2

Government unveils £300m mesothelioma support scheme

A £300m support scheme for people who develop mesothelioma after being exposed to asbestos at work but are unable to claim compensation because they cannot trace a liable employer or insurer has been announced by the Department for Work and Pensions.
Wednesday 25th July 2012
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Pricing Trading Manager - Contract

£700 - £1000 per day
Reference
148579

Head of Financial Risk

Flexible / hybrid working with minimum 2 days p/w office-based
£ excellent package
Reference
148578

Insurance Risk Leader

Flexible / hybrid with 2 days p/w office-based
£ to attract the best
Reference
148577
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ