NORTH-EAST businessman John Elliott has criticised the Bank of England for pumping more money into Britain's flagging economy.

Last week the Bank’s Monetary Policy Committee extended its asset purchase programme from £200bn to £275bn.

Under the programme, known as quantitative easing (QE), the Bank buys assets such as Government bonds in the hope that banks lend more money to homeowners and businesses.

It appeared to have a positive effect when the first £200bn was pumped into the economy in 2009, with analysts claiming the move had boosted GDP by up to 2%.

But Mr Elliott, chairman of Newton Aycliffe-based Ebac Group, said QE showed a lack of understanding of how the economy works.

He said: “How can the MPC believe that printing more money will help give the UK economy the boost it needs?

“Maybe we shouldn’t be surprised, because there are some that think that the Government should borrow more to solve the problem of too much borrowing.

“Printing money to fund the Government deficit or improve bank balance sheets will do nothing for the economy.

“We need to use the money we have now in a better way.

He said the UK needed more factories to produce the goods it currently imports.

“We currently have a trade deficit of about £27bn per annum which equates to about £400 for every person in the country,” he said.

“The reason given for this is that we can buy it cheaper from countries such as China.

“It doesn’t matter how cheap it is if we have no money and it appears that the banks that loaned us the money in the past don’t have any money either.

“Also if we’re paying people to do nothing it wouldn’t take much extra to pay them to do something.”