Similarly to the U.S., at the peak of the financial crisis the U.K. eased monetary policy to balance aggregate demand. Interest rates remain low and side effects of the the U.K.'s easing procedure caused future monetary easing to be limited. Then the only option seems to be fiscal policy. Government borrowing to fund infrastructure helps boost demand when there is uncertainty and strengthens supply. This shift of focus to fiscal policy should not take away from the importance of the job of central bankers. Central bankers have added responsibilities since the crisis such as new macroprudential instruments like bank stress tests which improves the strength of the financial sector. The Bank of England is now responsible for supervising the bank system. Also with interest rates close to zero and QE, the distinction between fiscal and monetary policy become entwined. Easing fiscal policy is supported by central bank purchases of sovereign debt. These new responsibilities involve the central bank in more controversial issues. A new social contract between central banks and society is needed because they don't just aim to control price levels with interest rates anymore, they purchased over £500 billion of gilt as part of its QE program which aided the chancellor in decision making.
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