October 12, 2009 / 10:27 AM / 10 years ago

Britain's Brown backs BoE on quantitative easing

LONDON (Reuters) - Prime Minister Gordon Brown gave his backing on Monday to the central bank’s program of pumping money into the economy to help pull Britain out of recession.

Britain's Prime Minister Gordon Brown arrives to give a speech at a central London venue, October 12, 2009. Brown set out on Monday plans for asset sales to help rein in the budget deficit. REUTERS/Kieran Doherty

Brown also confirmed that he planned asset sales of 16 billion pounds over the next two years as part of a deficit reduction strategy.

“There is a fundamental divide in British politics at the moment. Some people would withdraw the fiscal stimulus now at a time when the economy is still in difficulty, some people would stop quantitative easing today and that would imperil the recovery,” he told a business audience at a speech in London.

The Bank of England has cut interest rates to a historic low of 0.5 percent and embarked on an unprecedented 175 billion pound program of quantitative easing, creating money to help stave off the threat of deflation.

Conservative leader David Cameron, tipped to win an election due by next June, told his party last week that Britain would have to stop printing money soon because of the risk of sparking inflation.

As reported by Reuters on Sunday, Brown set out plans to sell assets to help cut a budget deficit expected to exceed 12 percent of GDP this year.

“Equally we plan a sale of assets to deal with our debt issues. I’ve said today that 16 billion of assets will be sold within the next two years,” Brown said.

The asset sales include betting company the Tote, the cross-channel rail link between Britain and France, a portfolio of student loans and the government’s stake in uranium-processing firm Urenco.

“We’ve listed a number of assets that we are determined over the next period of time to put into the marketplace. That includes of course the student loan book, the Dartford Tunnel (under the Thames), plus the Channel rail link, it includes Urenco subject to security issues being addressed,” Brown said.

“It includes the Tote. It includes other facilities and the property portfolio that will be announced over the next period of time.”

Some of these asset sales — such as the Tote, the student loans portfolio and the 33 percent Urenco stake — had been mooted before, but did not come to fruition because of difficult market conditions during the financial crisis.

Reporting by Matt Falloon; writing by Keith Weir; Editing by Toby Chopra

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