Hedge fund Marshall Wace lends support to Labour leader Jeremy Corbyn's economic policy People's QE

Jessica Morris
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Corbyn's people's QE has found an unlikely supporter in the City (Source: Getty)

One of Britain's wealthiest hedge fund managers has leant weight to what's arguably the cornerstone of new Labour leader Jeremy Corbyn's economic policies - so-called People's QE.

People's QE would involve the Bank of England (BoE) investing "in large-scale housing, energy, transport and digital projects". But critics, including Bank of England governor Mark Carney, have warned this would stoke inflation, threatening Britain's economy recovery.

Paul Marshall, co-founder of $22bn hedge fund Marshall Wace, has said that those working in the financial markets owe a debt to the BoE's current quantitative easing programme.

"It is no surprise that the left is angry about this, nor that they are looking for other versions of QE that do not so directly benefit bankers and the rich," he wrote in the Financial Times.

Read more: How Jeremy Corbyn’s People’s QE could win Labour the next general election

"In the UK, QE increased the money supply by £375bn, or about £5,800 per person. If this money had been distributed evenly it might have been frittered away on consumption rather than making a few rich people richer and bailing out the banks. But it might have been fairer."

Marshall goes on to say that Corbyn's form of QE - which would target infrastructures projects rather than financial assets - could actually be viable. However, it must be held back until Britain faces another financial crisis, as using it before this risks sending prices soaring.

"QE had clear wealth effects, which could have been offset by fiscal measures. All political parties should acknowledge this. So should those of us who want free markets to retain their legitimacy," he said.

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