17th August 2012
It has been reported that refunds to customers who were mis-sold payment protection insurance are having a similar effect on the UK economy as a tax cut.
It has been suggested that the scandal has a silver lining, with average pay-outs of £2,750 giving consumer cash flows a much-needed injection.
The National Institute of Economic and Social Research (NIESR) said that even by a conservative estimate, a £10 billion PPI pay-out in 2012 could have the effect of raising GDP by 0.1%. Simon Kirby, a senior research fellow at the institute, said: PPI payments are a boost to household finances which are broadly the same as having a temporary tax cut.