Spreadbury: UK growth at risk from more QE

The latest round of quantitiative easing is a threat to future economic growth in the UK, Fidelity's bond star Ian Spreadbury has warned.

Speaking after the publication today of minutes from the Monetary Policy Committee's (MPC) latest meeting, Spreadbury said the latest move to boost the economy may in fact do the opposite in the long run.

"Not only could it prove inflationary in the future but it is already causing distortions," he said.

"It is helping keep inefficient parts of the economy afloat - banks are a good example. It is interfering with free market forces and keeping debt at historically high levels, which is preventing the economy from resetting itself."

Spreadbury, manager of the top performing £914m Fidelity Strategic Bond fund, said as a result he is "worried this could damage prospects for UK economic growth in the long term".

His comments come after the minutes revealed a number of members of the MPC wanted to inject more than the £50bn the committee eventually opted for earlier this month.

The extra stimulus took the total amount of QE to £325bn, and Spreadbury conceded it should help to stimulate economic growth, although the path to recovery has been far from smooth, with the economy shrinking in the last quarter of the year, down by 0.2%.

Spreadbury said ultimately the economy still needed to deleverage, and he warned QE is simply putting this off.

"The danger is QE is just delaying the inevitable path the UK economy needs to take in order to make future progress. This is, of course, to deleverage" he said.

Spreadbury is far from alone in his fear over the future impact of QE. Many commentators have warned the policy is building up an inflation problem for the future, and Spreadbury said it remains a tail-risk which additional QE could make worse.