Bank of England defends printing £375 billion - but who really cashed in?

After very public concerns over the impact of the Bank of England's money printing bonanza, the Bank itself today has published a very bullish defence of its actions.

While it is hard to put a figure on precisely how much it contributed to the economy the Bank's report claims it kept unemployment down, stopped many companies going out of business, and rather than destroying the price of assets actually pushed them up.

The Bank claims that electronically creating £375 billion rather dramatically increased the wealth of households by 16% because it increased the value of assets.

That translates to about £600 billion, including the value of pension funds, but not property.

Jolly good, you might think, and rather surprising in a time when so many people have been feeling hard up.

Except the tricky thing for the Bank is that that rise in value was lapped up by the richest slice of society.

The report reveals that the wealthiest 5% of households hold 40% of all household assets, excluding pensions. And because proportionately they own a much bigger chunk of the country's wealth, they proportionately benefitted much more from the increase.

Imagine, Joe Bloggs owns £100 worth of shares. Joe Brown owns £10,000 of shares. Share prices go up 10%. Joe Blogs gets an extra tenner, Joe Brown gets an extra thousand pounds.

It is impossible to say exactly how much different individuals netted as a result, although some will no doubt try!

But it is clear that most of the benefit was at the top. The less well off, the Bank argues, have benefitted from QE because it prevented the economy from getting much worse.

But as the Bank is likely to press the button on another round of printing money in the next couple of months, the argument about who benefits the most gives ammunition to those who are not fans of the policy.

What's also striking is how bullish the Bank of England is in denying the impact QE has had on pensions.

Indeed the most familiar argument against QE has been it erodes the income of those on fixed incomes, pensioners, whose savings have been under attack from the policy.

The Bank however roundly disputes this, saying in fact pension funds benefitted from the rise in asset values just as everyone else did.

The 60% on defined benefit pension schemes, where pension payments are fixed, the Bank says were not affected at all.

And the drop in annuity rates is something that was happening in other countries.

Pensioner groups are already seething at this suggestion. But the Bank is clearly determined to stand by its decisions. And independent pension experts agree it is impossible to blame just QE for the fall off in private pension income.

Also buried in the report is a fascinating statistic that makes life harder for those arguing pensioners have had it rough.

Since the recession hit in 2007, the Bank identifies that over 65s are the only group in the population who have been able to afford to spend more every year.