Raising retirement age could help Bank of England fight next recession, according to top official
Raising the retirement age could help the Bank of England fight the next recession, according to a top official.
Gertjan Vlieghe, who is on the monetary policy committee (MPC), said people save more as they approach retirement, which pushes down borrowing costs on financial markets.
Pot luck: People save more as they approach retirement, which pushes down borrowing costs on financial markets – this makes it harder for the Bank to stimulate the economy in a slowdown
This makes it harder for the Bank to stimulate the economy in a slowdown because cutting interest rates has less of an impact.
In his final speech as an MPC member, Vlieghe argued for ‘reducing the time spent in retirement’.
He added: ‘Many countries, including the UK, are slowly raising their retirement age, though it is by no means keeping up with the increase in longevity.’
He said not all jobs could be done by older staff, adding: ‘One might at least consider removing policies that compel workers to retire before they want to.’