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Why negative interest rates wouldn’t help the UK economy

The Bank of England must not implement this perverse policy

By Andrew Sentance  

SOPA Images/SIPA USA/PA Images

Will the Bank of England soon join the European Central Bank (ECB) and the Bank of Japan in taking its official interest rate into negative territory? Speculation was fuelled a few weeks ago when the Bank wrote to financial institutions asking them how they might implement such a policy, if it were put in place.

The idea of negative interest rates seems perverse. Surely savers should receive a positive return on money they invest with a bank and borrowers should pay a…

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