If you’re worried, don’t be: the Bank of England’s £85 billion debt is no more than an accounting line.
By that, This Writer means the cost should be covered by profits the Bank has made on the same aspect of its business: quantitative easing.
Remember QE? It was the miracle cure for the UK’s massive debt problems in the aftermath of the Great Financial Crisis (GFC): the Band of England bought up hundreds of billions of pounds worth of debt in the form of government bonds.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The aim was to keep interest rates – and therefore the cost of borrowing – down, stimulating the economy into growth.
The tactic was successful, so the Bank repeated it to help the economy cope with Brexit, the Covid-19 pandemic, and Liz Truss.
But in order to buy these bonds, as I understand it, the Bank borrowed from commercial banks.
This was fine for the 15 years until last year, when interest rates were low – because the returns from the government bonds were larger than the interest being paid back to the commercial banks.
In fact, the Bank profited by £123.8 billion – money that it transferred to the UK’s Treasury between 2009 and 2022.
Now the tide is turning. The Bank itself was forced to raise interest rates to combat the inflation crisis caused by rising energy costs and (let’s be honest) commercial greed.
This means it is now paying more in interest than it is receiving in returns on the bonds, at a time when the Bank is trying to rid itself of £100 billion in bonds every year.
The result is an expected loss of £85 billion over the next 10 years or so.
That’s still a lot less than the £123.8 billion that has already gone to the Treasury, so the public purse is still in profit and the Bank of England’s £85 billion debt is no more than an accounting line – right?
Well, possibly.
It depends what Rishi Sunak’s government has been doing with the money.
Would you trust these spendthrift Tories with it?
Source: Bank Of England Bonds Bungle – Prolific London
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Bank of England’s £85 billion debt is no more than an accounting line
If you’re worried, don’t be: the Bank of England’s £85 billion debt is no more than an accounting line.
By that, This Writer means the cost should be covered by profits the Bank has made on the same aspect of its business: quantitative easing.
Remember QE? It was the miracle cure for the UK’s massive debt problems in the aftermath of the Great Financial Crisis (GFC): the Band of England bought up hundreds of billions of pounds worth of debt in the form of government bonds.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The aim was to keep interest rates – and therefore the cost of borrowing – down, stimulating the economy into growth.
The tactic was successful, so the Bank repeated it to help the economy cope with Brexit, the Covid-19 pandemic, and Liz Truss.
But in order to buy these bonds, as I understand it, the Bank borrowed from commercial banks.
This was fine for the 15 years until last year, when interest rates were low – because the returns from the government bonds were larger than the interest being paid back to the commercial banks.
In fact, the Bank profited by £123.8 billion – money that it transferred to the UK’s Treasury between 2009 and 2022.
Now the tide is turning. The Bank itself was forced to raise interest rates to combat the inflation crisis caused by rising energy costs and (let’s be honest) commercial greed.
This means it is now paying more in interest than it is receiving in returns on the bonds, at a time when the Bank is trying to rid itself of £100 billion in bonds every year.
The result is an expected loss of £85 billion over the next 10 years or so.
That’s still a lot less than the £123.8 billion that has already gone to the Treasury, so the public purse is still in profit and the Bank of England’s £85 billion debt is no more than an accounting line – right?
Well, possibly.
It depends what Rishi Sunak’s government has been doing with the money.
Would you trust these spendthrift Tories with it?
Source: Bank Of England Bonds Bungle – Prolific London
Vox Political needs your help!
If you want to support this site
(but don’t want to give your money to advertisers)
you can make a one-off donation here:
Be among the first to know what’s going on! Here are the ways to manage it:
1) Register with us by clicking on ‘Subscribe’ (in the right margin). You can then receive notifications of every new article that is posted here.
2) Follow VP on Twitter @VoxPolitical
3) Like the Facebook page at https://www.facebook.com/VoxPolitical/
Join the Vox Political Facebook page.
4) You could even make Vox Political your homepage at http://voxpoliticalonline.com
5) Join the uPopulus group at https://upopulus.com/groups/vox-political/
6) Join the MeWe page at https://mewe.com/p-front/voxpolitical
7) Feel free to comment!
And do share with your family and friends – so they don’t miss out!
If you have appreciated this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!
Buy Vox Political books so we can continue
fighting for the facts.
Cruel Britannia is available
in either print or eBook format here:
The Livingstone Presumption is available
in either print or eBook format here:
Health Warning: Government! is now available
in either print or eBook format here:
The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:
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