I am trying to get more to put this case to the Treasury and Bank to stop the outrageous losses. Please use this text.
The Bank of England has received £49.4 bn in payments from taxpayers and the Treasury so far to cover its losses on holding and selling bonds.. OBR forecasts point to further substantial losses to come. They estimated these at £179 bn in the March budget papers. This year could see the need to pay the Bank of England a further large sum.
These payments increase the public sector deficit excluding the Bank of England, which is the figure used to assess how much headroom the government has to increase public spending and or reduce taxes. It is in everyone’s interest to minimise these losses and to protect the taxpayer from the possible outcome forecast by the OBR.
There are three main sources of loss. Some of the bonds were bought at prices above the repayment value of the bond. These losses are unavoidable if the bonds are held to repayment. It is true if at some future date interest rates had tumbled and the price of the bonds have again risen above the repayment value you could then sell at a profit. We cannot assume that is going to happen anytime soon. Meanwhile there will be some losses as bonds mature.
The Bank is actively selling £100bn of bonds a year into the market, taking larger losses than if they held them to maturity, and taking the losses sooner than they need to. The Bank could stop selling these bonds, allowing them to be repaid in due course on maturity. Some mature quite soon, Others are long dated and can stay on the balance sheet. Stopping selling the bonds would stop a large amount of the total losses.
The European Central Bank and the Federal reserve Board also bought lots of bonds at high prices and have considered what to do with them. The ECB has decided not to sell any prematurely into markets that are now so much lower than when they bought the bonds. They will allow them all to run off as they mature with lower losses. The Fed has been selling some Treasury bonds but has recently stated it plans to halve the rate of sale, and to place more emphasis on selling shorter dated bonds where the losses are considerably lower than the losses on long dated. When interest rates are pushed up as they have been losses on longer dated bonds are much larger than on short dated, because you have to wait so much longer to get your money back.
The third source of loss is the Bank receives a lower rate of interest on the bonds it has bought than the rate of interest it pays the commercial banks for the money they deposit with it. All the time the Bank keeps the base rate as high as today there will be losses on simply holding the bonds. The ECB has decided it will no longer pay interest on minimum reserves commercial banks have to hold with the Central Bank to cut these losses. The Bank of England and the Fed did not pay interest on reserves prior to 2006. The Bank of England could align its policy with the ECB.
These actions would lead to a substantial improvement in the UK public sector finances excluding the Bank of England. The Bank would not suffer as a result, as it admits these sales are not crucial to its monetary policy. These proposals do not interfere with Bank of England independence. The Banks independence is over settling the Base rate and assessing inflation , which this does not change. The Bank says it acts as an agent for the Treasury over bonds. It needed the approval of successive Chancellors for all the purchases, and insisted on a Treasury guarantee against loss. As the Treasury is the guarantor it can also influence when these bonds are sold.
April 21, 2024
“Please use this text.” – we should write to one or both of Messrs. Hunt and Bailey?
Reply Yes
April 21, 2024
Sir J,
Have to tried to have a face to face interview with either Hunt or Bailey, or both, to explain your concerns?
PS. One part of government giving money to another part to reduce the total Money Supply. Losses?
April 21, 2024
@ Reply – letters on their way to: –
The Right Honourable J. Hunt, MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ
Andrew Bailey
Governor
Bank of England
Threadneedle Street
London
EC2R 8AH
If that does not clap a stopper over their capers then I do not know what will.
April 21, 2024
My own MP has now been asked to replicate my actions in issuing letters.
April 21, 2024
Someone in government would have to have signed this off. Name the name apportion blame.What’s the betting it was a scruffy, blonde buffoon who no doubt when to Eton and was Oxbridge. Why are these Oxbridge droogs let loose on our nation’s culture and finances? The damage they have inflicted has been incalculable
April 21, 2024
Oxford not Oxbridge though Camb. do have similar dopes doing politics & philosophy or classics.
April 21, 2024
Scruffy blonde buffoon……now who could you possibly mean???
Point taken, and I agree. However, I don’t think the likes of Blair and many others who have had a hand in our demise are of the Eton/Oxbridge set.
Be careful not to fall into the trap of blaming everything on Eton/Oxbridge as it is quite fashionable from the left to convince everyone that that is how and where all our problems arose from.
April 21, 2024
The Chancellor signs off. His obedience at the Exchequer will have been remembered when choosing him as PM. Boris and Miss Truss weren’t obedient enough.
April 21, 2024
Gaining traction. I read 40 senior MPs have written to Hunt.
Calling having to take the vast losses without parliamentary oversight, undemocratic. Politically very clever.
Reply I was asked to draft a letter with stronger recommendations than the other one.This is it.
April 21, 2024
It’s almost as if they WANT a recession?
To scupper incoming Labour.? Nah!Two cheeks etc.
To impose a digital currency? Oh dear…conspiracy…but….
April 21, 2024
What’s the point. Bailey who is a joke will continue doing as he wishes to bankrupt the country
Some people are making billions from this
Let’s follow the money.
April 21, 2024
What I’m missing here is the reason why the BE is selling these bonds. SJR makes a good case showing they should not be selling them, so what is the BoE’s explanation for its actions?
According to a Reuters ‘explainer’ article, it’s because the BoE is aiming to align its gilts holdings with the levels of state debt held by other central banks. In other words it’s acting as part of a global banking network which apparently sets policy for how much the state can raise money from central banks. The BoE is making big losses in doing so because the bonds it’s selling off have low or even negative interest rates, so they have to be sold cheaply in order to attract purchasers. Those losses are being imposed by a policy of not holding on to too high a level of state debt, according to Reuters, which is presumably getting this explanation from the BoE.
Yet this country’s state debt is not particularly high as a % of GDP. According to IMF figures for 2022 we have the lowest level of state debt of major European countries, other than Germany.
I don’t have a background in economics. I’m just an interested layman curious to know what our rulers are up to. So I wonder if the policy of reducing government debt on the BoE’s balance sheet has to do with this country’s unusual way of calculating GDP based on output, not spending. This method meant that our GDP took a much bigger hit from the lockdowns than it would have done if based on spending. Perhaps if our GDP was expressed in spending terms, we would have a much higher level of debt, then the BoE’s actions would receive some kind of explanation.
Reply The Bank have supplied no explanation other than to say QT is not crucial to monetary policy. They have a strange asymmetric view. QE boosts the economy, QT does not slow it!
April 21, 2024
Reply to reply
If the Bank’s actions are determined by what a group of international bankers decide, maybe that’s why it prefers to say nothing and not admit as much.
April 21, 2024
The monetarist view is presumably that QE creates inflation. QT unwinds QE and therefore cancels the inflationary impact of QE. This can be the only justification.
Has Mr Hunt responded at any time on this issue – presumably it’s in his interest to create more ‘fiscal headroom’?
Reply Mr Hunt knows my views. He has not commented on this policy. The Bank does not accept that creating extra money is inflationary .
April 21, 2024
Its 101 even at ‘O’ level economics, that the creation of extra money ‘IS’ inflationary
April 21, 2024
With debt interest about the same as spending on education, and several times what’s spent on defence, the state debt is colossal.
All this liability pushed on to the next generation. What have they done to deserve that?
April 21, 2024
Richard II :
Thanks for this explanation which could well be true. What is clear Is that the BoE and the PM/Treasury are in alignment with the policy as described by Sir John and are determined to pursue it even to the detriment of the UK.
We have to remember that PM Johnson informed us that we must “Build back better” which has to start with economic destruction, aka his Net Zero Strategy, and the current PM, when Chancellor at COP26 declared “So our third action is to rewire the entire global financial system for Net Zero.”
As xxxxxxx George Soros says change occurs at times of chaos and the entirely false narrative that we have CAGW requiring the economy destroying Net Zero Strategy coupled with mass immigration is designed to achieve the necessary chaos
April 21, 2024
I agree with you, OR, and that’s why I think writing to Hunt or Sunak is pretty pointless. My impression is, they’re the monkeys, not the organ-grinder.
April 21, 2024
I will send it to Hunt and Bailey later today ….. but I expect they’ll take as much notice of me as my local MP does. ie none.
They only take notice of the WEF and IMF.
April 21, 2024
You would do more the country standing as Reform’s finance minister.
April 21, 2024
And lose? No! When you become acquainted with Reform you will be astonished.
April 21, 2024
I’ve become acquainted with the current Tory Party and I am ASTONISHED.
April 21, 2024
See Dan Hannans excellent article in the telegraph today, reform are a complete waste of space – an incontinent wish list of policies few could disagree with and no clue how they might be delivered.
April 21, 2024
Well perhaps they have the right policies but given FPTP voting they will not gain power but the Conservative are 180 degree out on almost every single policy Labour will be even worse but the Sunak Tories deserve total destruction. Not least for his blatant lie or total delusion to Parliament and the people that the Covid Vaccines were “unequivocally safe”.
Also for his four broken promises and on the one he has hit he caused the 11% inflation in the first place with his QE, waste, lockdowns, furlough, net zero…anyway.
April 21, 2024
See the comments on Dan Hannan’s article very few are impressed.
Claire Coutinho (Secretary of State for Energy Security and Net Zero a direct contradiction in her very title) just now on GBNews says she “does not want to impose extra costs on people”. Well what on earth does she think net zero does? It is vastly expensive circa £100k per household and with vast economic damage and jobexporting on top of this and with zero upsides benefit.
Needless to say she has sensible not wasted any of her money on heat-pumps.
She read Maths and Philosophy Oxon so almost a sensible degree alas not Physics or Electrical Engineering at Camb. but she should be able to add up and work out what total insanity net zero is. A clue for her look at winter demand for heat-pump electricity and work out what extra grid, generating capacity and back up will be needed. A vast investment and disruption needed just for that. Also look up Carnot efficiency the COP efficiencies heat pumps give even with tepid rads make little sense other than perhaps in some new builds.
April 21, 2024
Asked (twice) what the costs of hitting the net zero targets by 2050 were her answer (twice) was “there are lots of costs out there”
Let me help Claire, it is totally impractical and so will not actually happen, but if they really went for it, then it would cost at least £6 trillion twice the UK’s GDP. The benefit would be zero in fact far worse than zero hugely negative as huge disruption needed for all the grid etc. capacity “improvements” and vast damage to jobs, our ability to compete and to the economy.
April 21, 2024
It will also freeze pensioners, impoverish people and kill people Claire.
April 21, 2024
LL :
You cannot explain why Claire Coutinho is pursuing the Next Zero Strategy. Sir John cannot explain why the BoE is selling bonds at “outrageous losses”.
The reason is the same for both cases, the economic destruction of the UK.
To quote Sherlock Holmes – Sir Arthur Conan Doyle : When you have eliminated the impossible, whatever remains, however improbable, must be the truth.
April 21, 2024
Read the best comments beneath the article before judgement 👌.
April 21, 2024
Well Dan is one of the more sensible Tories. But Sunak is 180 degree out on nearly all issues not only that he lies to use that he has cut taxes, the Covid Vaccines are unequivocally safe and that he will stop the boats, cut NHS waiting lists, will grow the economy, reduce debt he is doing none of this. Plus he is hooked on Net Zero by 2050 an insane policy that his energy sec. will not even cost (various costs are out there she says). Actually it will cost about 2 years GDP. Benefits negative too!
April 21, 2024
A complete waste of space????
As opposed to what?
14 glorious years of a Conservative party given a whopping majority, a blank cheque and who are now mere dregs in the barrel who can’t run down a few people traffickers and turn round a few boats. They certainly have a great idea of how to deliver policies.
A waste of space compared to Labour? Led by someone who shuffles around on knee pads to appease the mob, and who believes women can have a penis.
I’m more than happy to give them a chance, imperfect they may be. At this stage of the game what is there really to lose if they are liars, or incompetent, it’s not like we’d be giving up honesty, integrity and efficiency by discarding the Lib/Lab/Con is it.
Hannan is another who sees a nation only in terms of it being a business park.
I saw a young chap ask him a question about the future of the young folk here, and how all the immigration was changing the face of Britain and likely to affect their future. Did he think it was an issue. The reply was no, and in a round about way he was suggesting that the main issue is only ever about who makes money and then some waffle about him being from Peru. Well a quick google showed he is not Peruvian, he was born there because his Mother (a Scot) worked in the British embassy.
April 21, 2024
A case of motes and beams. None of the parties in Parliament has a coherent programme, particularly concerning infeasible net zero ambitions and immigration. That does include Reform with their MP, but other parties have much more damaging policies.
April 21, 2024
Richard1 :
Reform may be a “complete waste of space”. But voting for the Conservatives just because they are not as bad as Lab/Lib Dem/Green is to vote for high tax, high spend, high immigration and the economy destroying Net Zero Strategy. Any vote for any of the existing Parliamentary parties will be taken by these parties as a vote for these policies.
What will be a “waste of space” will be if a Conservative Opposition in the next Parliament is formed from a majority of existing Conservative MPs as they will provide no opposition at all to Labour’s policies. In fact, quite the reverse. Opposition will need to come from elsewhere.
April 21, 2024
Indeed. UKIP was the only opposition for the Brexit vote. If we want change we need to vote for it. Reform.
April 21, 2024
Javelin, +++++
My viscerally voted preference priority is to ditch the treacherous Tory Party, a party to which I had donated to in the past.
The obstinate entrenchment of a woke and malign culture which has no obvious connection with conservatism as we once knew it must be swept away, the Policetinian MET, the stifling quangos and regulatory bodies, disincentivising tax structures, etc., etc., etc., all so well identified by yourself, Javelin, by LL, DOM, Donna, etc., etc., etc.
Melanie Phillips’ speech at the thrice closed down National Conservatism Conference in Brussels was a tour de force of the unspoken concerns of so many in this country.
April 21, 2024
The Contaminated Blood Scandal was described as “the deadliest manmade disaster since the war” on GBNews just now well hardly. Still fighting for compensation after 40 years. Circa 3000 dead and 30,000 injured it seems.
But 200 million dead from the Covid lab leak after gain of function experimentation. Yet some scientists and most politicians in the US, China and UK still want to hide this.
The Covid “Vaccine” Harms might even be as high as this figure eventually too. Will they still be fighting for compensation in 40+ years? Those that live that long anyway. The years of quality life lost worse as they have killed and injured many young people (who should never have been given them anyway) whereas Covid victims were mainly rather old.
April 21, 2024
20 million. Still terrible of course, but important to get the orders of magnitude correct.
Likely to have been much higher without the vaccines.
April 21, 2024
Sorry yes circa 20 million. Very little evidence the vaccines saved lives overall at all. The virus simply became less dangerous as it evolved – as they tend to do. That is doubless the reason for better figures later in the pandemic not the vaccines. The “vaccines” almost certainly did net harm. That harm is still continuing and is in a far younger age profile too.
That is why the UK government and many others are refusing to release the statistics by vaccination status. It will not be hidden it is worldwide. Also the banning of other treatments to promote the “vaccine” killed people as did the morphine and midazolam agenda.
April 21, 2024
I’m coming across more people now who are putting two and two together as to their endless ill health and their slavish adherence to the vaccine and its never ending boosters.
April 21, 2024
I now know directly of five serious heart issues that came on directly after vaccination jabs. three young two about 60. I do not know that many people so that is circa 2% of my friends! Two required major operations the other three have significant new arrhythmias.
April 22, 2024
The claim by the Governmental / WHO-supporting Covid “experts” about “lives saved” is based on modelling.
There is no proof whatsoever. Its propaganda.
And what is a “life saved?” Most Covid mortality was in those who were already knocking on Heaven’s Door …. very elderly/frail or with several co-morbidities. If their impending death was delayed by a few months, is that a “life saved?” Or just a death slightly delayed? At massive cost.
Most of the people who have been killed or seriously injured by the experimental jabs are young/ish; working age who would have had years of contributing to society ahead of them.
April 21, 2024
Many years ago I wrote to the Chairman of the Conservative Party about the way it was NOT governing the Country, and the failure of its Ministers and Prime Minister at the time.
The reply I received was, please write to your constituency MP.
Afraid that reply showed me the level of interest the Chairman of your Party had in my views at the time, which was ZERO !
I did copy you in at the time JR, and you did take it further, but I still never got a reply.
Happy to try again if you think it will make any difference, but my guess is it will never even be read by those who protect these people from the real World and real feedback.
April 21, 2024
++
I do feel that the majority of elected politicians have long since forgotten who it is they are duty bound to represent.
Everything is geared toward the ‘global’ and their place in it while they are politicians, and the benefits it can bring them afterwards.
That is not democracy, nor how they should be allowed to govern.
Now we are so atomised into different ‘communities’ it’s going to be a harder place to govern without the help of the strong arm of their global paymasters. In the spider web we sit stranded.
April 21, 2024
Rodney has reminded me that Keynes ‘assumed stable prices’ – in other words he was not anti-monetarist. He did not comprehend that his deficit spending would lead to a loss of monetary control.
Perhaps using this in the same way that you are defeating the Greenies with their own proposals might shake up the Treasury? 🤞🏻
We will write to Hunt and the BOE.
April 21, 2024
Keynes first really came to attention for his comments on inflation in 1919 (The Economic Consequences of the Peace) which he understood well
There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
His subsequent fame and General Theory (1936) dealt more with responding to the Great Depression.
April 21, 2024
The Delusion of Liz Truss and other regarding saving the west in 10 years.
I want the same as Liz Truss (1. Very Low Tax, 2. Very High Productivity, 3. Very Low Immigration. 4. Lots of Patriotism and so on) and like Liz I think it’s possible. However, the delusion of Liz and others is that all this can be achieved by politics alone. That is HUBRIS.
The problems of Western Civilisation today (not just the UK) are largely social / cultural (Lack of traditional Conservative values in the FAMILY – or lack of – HOME, NEIGHBOURHOOD, and COUNTRY overall. A lack of values such as: 1. Work Ethic 2. Responsibility for self 3. Relying on Family instead of state 4. Family values 5. Being properly Masculine or Feminine 6. Patriotism and so on).
In fact, 90% to 95% of the problems with our country are cultural / social and that can only be reversed with the following working together – people in: 1. Politics (but not on their own) 2. The churches 3. Arts. 4. Media. 5. Education. Politicians can only work with the raw material provided to them (i.e. people working hard, looking after their health, taking responsibility for themselves). So Tories have to take a lead working with people in the churches, arts, media and education to reverse decline in Conservative values. That’s their priority by far. Things like economic policy and the like are of secondary importance (and by quite a margin).
In fact, to over-focus on politics in any, shape or form will just make matters worse.
April 21, 2024
I can certainly agree with all those points you raise regarding society in general and the appalling state of it.
Not everything is down to ‘markets’ ‘GDP’ etc. and they alone do not make a strong nation.
Our social problems do cause a drain on us economically as well though.
The pendulum has swung too far the other way socially.
It is though, all those institutions you mention, such as political establishment, church, education, certainly the media/arts world that has for decades now been pushing the populace towards the cliff edge, with the aim of destroying all that was.
To build their new improved vision of Britain, they first need to remove all its foundations and demoralise its long standing connected population.
April 21, 2024
Also, it’s also putting an unnecessary and unfair burden on politicians!
Everyone has to take responsibility for what’s happening in our society, including parents, teachers—-everyone. And not just blame politicians which is what people love to do. But at same time, I’d encourage politicians to take a lead in TRYING to redress this social / cultural mess (working more closely with leaders in the churches, education, the arts, media etc). Not forgetting, that one of the gifts of being a politician isn’t just intelligence, education and knowledge of how the world works, but also the gift of leadership. So I’d encourage them to take a lead in this (not just focus on politics / the economy – vital as these are of course).
April 21, 2024
I’ve written to my MP. I suggest other readers do the same. My redacted text as inspiration:
Dear …,
I’m a constituent: town, post code.
I hope you’re a follower of Sir John Redwood MP’s daily writing. Today, he sums up his long-held position on what ministers should do to stop the Bank of England increasing Government debt.
Sir John has complained publicly that no other MPs seem interested in this waste. I hope that’s an uncharacteristic exaggeration and you are one exception. If not, please have a read and the next time you see him, let him know his message is looping back to other MPs.
Sir John’s summary: https://johnredwoodsdiary.com/2024/04/21/the-case-for-change-at-the-bank-of-england/
One extract:
‘These proposals do not interfere with Bank of England independence. The Banks independence is over settling the Base rate and assessing inflation, which this does not change. The Bank says it acts as an agent for the Treasury over bonds. It needed the approval of successive Chancellors for all the purchases, and insisted on a Treasury guarantee against loss. As the Treasury is the guarantor it can also influence when these bonds are sold.’
I track his new posts by RSS feed. They’re normally brief, interesting, and insightful. https://johnredwoodsdiary.com/feed/
Yours, etc…
April 21, 2024
The biggest mistake that the BoE/Treasury has made over the past 30 years was selling off the British taxpayer’s gold – at pitifully low prices. Gordon Brown kicked it off selling 300 tons at the exact bottom of the 1990’s bear market in the precious metal. And he repeatedly told the market that was what he was going to do in advance!
Gordon Brown is one of yesteday’s men. He should stop trying to influence Starmer and Reeves with his failed economic policies, retire to one of Scotland’s offshore islands and hold his own counsel.
April 21, 2024
Correct. What sort of fool announces it in advance? Did he not have an economics degree? How did he pass?
April 22, 2024
I don’t often agree with you, but on this you are absolutely right.
So should Blair – except a Scottish island isn’t far enough. South Georgia, with no internet connection and no way of leaving, would be better.
April 21, 2024
To the relief of NATO, President Zelenskyi and many supporters of Ukraine, yesterday “MAGA” Mike Johnson, the Speaker of the American House of Representatives, organised a Saturday vote on the lethal aid bills for Taiwan, Israel and Ukraine. Most of the bills that were voted on received overwhelming bipartisan support and many Representatives from both sides made fine speeches, focussing on the need to defeat the war criminal Putin before Russia is in a position to threaten NATO members directly.
One or two MAGA Republicans spoke against, doubtless influenced by Mr Trump’s demands that Ukraine trade land for “peace”. Trump should get someone to explain what happened the last time we tried appeasement as a policy – to contain Hitler and his NSDAP (NAZI) party
April 21, 2024
@ Sakara Gold – the last time we had the defeat of the Munich Agreement over Czechoslovakia but we, the U.K., had no need to be involved in “a quarrel in a far away country between people of whom we know nothing” and we do not on this occasion. The U.K. would have been immeasurably advantaged had it left Hitler and Stalin to fight each other to exhaustion whilst keeping itself aloof. Today the U.K. has neither the comparative wealth nor the capabilities that it had in 1939.
April 21, 2024
Typical leftwing nonsense….A plan that saves lives and ends a very expensive war is hardly appeasement – IT IS DIPLOMACY.
April 21, 2024
At least that means European countries such as Britain won’t need to increase their state debt much further to keep their unaffordable support for the war going. The taxpayer has paid more than enough already.
The $60bn ‘for Ukraine’ will mostly be given to the US military-industrial complex, which will be able to produce lethal aid at nowhere near the level required to match Russia’s military production. By the time the US gets itself organised enough to send whatever materiel it has managed to produce, Ukraine’s manpower and will to fight will be exhausted. Ukrainians will look at the economic regeneration beginning in Mariupol and other areas recovered from Kiev’s grasp, and ask themselves which side their bread is buttered. Do they want to be part of a vibrant Russian economy going forward, or stay in a country that’s an economic basket case, whose remaining assets risk being stripped out by the likes of Black Rock and Vanguard? Sorry, SG, but if they’re given the choice I don’t think they’ll want to die for you and your warhawk friends.
April 21, 2024
I’m going to support this initiative by voting for someone other than the Conservatives who approved and supported this BoE policy (and still do).
April 21, 2024
@ Roy Grainger – but support it today by reproducing Sir John’s words in letters to Hunt and Bailey. The more letters they receive, the more notice they will take.
April 21, 2024
Sir John has been critical of the BoE’s role and decisions for some considerable period of time ; no one in authority has ever disputed his claims or proved them wrong . So why the continuing mess ?. The public are powerless unless their representatives act on their behalf and this never seems to happen . Revolt must surely now be on the cards .
April 21, 2024
Why don’t you engage with the PM or the Chancellor in the HoC about these matters instead of going on an on outside the House. Surely if you want to put the finger on someone do it where it matters.
Reply I have made speeches in the House about it!
April 21, 2024
All of these £Billions, just thrown away!
The Bank, Treasury and Chancellor are complicit in destroying our economic future, one cut at a time.
Huge amounts are still shunted off abroad, adding to the enormous waste by government.
The Bank surely knows what it is doing — Has anyone ever asked them WHY?
Is there any logic behind their irrational actions?
£Billions are still being wasted on useless wars that will never achieve anything but more destruction, more deaths and more horrors.
Please JR, continue to fight this awful squandering of what we still have left.
April 21, 2024
It is unacceptable, if the Reuters report is correct, that external forces are driving these actions by the BoE. We must conclude that there is a conspiracy of silence at work because of the prolonged official silence about the issue. Unfortunately the UK has snookered itself with unsustainable state expenditures that will not be covered by unsustainable taxation and witless regulations which stifle enterprise and wealth creation. Neither of the main parties has a solution as they too appear equally witless. Both need a bloody nose at the next election. Given the dearth of common sense on offer, our host excepted, the outlook is dire. We need actions that cut or eliminate taxes and regulations that impede enterprise and wealth creation.
April 21, 2024
Totally agree. And congratulations on your long campaign against Bank losses . I see that pressure is now building in the Commons on this issue.
April 21, 2024
I read the most recent BEAPFF annual report, now a year out of date though it will be a few months before we see the next one. However, it does record the MPC decision to stop reinvesting redemption proceeds in Feb 22 when they also decided to divest all corporate bond holdings. In August they decided on an £80bn programme of gilt sales over the next year which was immediately destabilising, forcing them to buy back what they had sold and more by the end of Feb 23 when the accounts were made up, but undermining the Truss government before the reversal.
The holdings produce an income of about 2% on acquisition cost (£17bn on ~£850bn), most of which is funded by the BoE loan, which is based on Bank Rate, now 5.25%. Net income is therefore ~-3.25% of asset cost currently, and that cost is part of the cash charge to the Treasury along with crystallised losses from sales and redemptions. Perhaps the Bank should not get fully indemnified for setting high base rates that signal historic policy failure: better still if it impacted MPC remuneration.
The latest programme is for liquidation expanded to £100bn a year as described in the quarterly summary here
https://www.bankofengland.co.uk/asset-purchase-facility/2023/2023-q4
This can only depress gilt prices and keep interest rates high. You can be sure that an incoming Labour government will hope to halt the liquidation because it will clearly need to borrow a lot more for its programme.
The only good thing about limiting government spending in this waupy is that it might reduce the spend on value destroying policies. However, it seems governments of all stripes (Con, Lab, SNP, Sinn Fein) in the UK prefer such spending to making proper economic choices.
April 21, 2024
SJ, this is getting scary. What is going on at the BoE and the Treasury? Are we now at the mercy of incompetents with OUR money?
With the economic future of the country at stake, the BoE is crying out for an urgent and rapid change of management, and that is within the power of the Chancellor and the PM, NOW!
Why are they not addressing this serious problem? Those running the BoE and the Treasury are doing a bad job and, as a consequence, running this country into disrepute. Normally, anyone who is incapable of carrying out their duties efficiently, under those terms, is sacked. Hmm.
But does that rule only apply to shop-floor workers in this country, and never to the Public Sector? It appears so.
April 21, 2024
Though I formed ( or perhaps confirmed) my opinion that select committees are pretty much a waste of time (when about 20 years ago the government just ignored a semi-sensible recommendation by the relevant select committee, on the Sellers’ pack just prior to their thankfully short-lived introduction) why isn’t the Treasury Select Committee (or even the Public Accounts committee since it involves so much public expenditure) investigating Sir John Redwood’s critique of bond sales, especially since an enormous amount of money is involved?
April 21, 2024
“Labour must “reset” relations with the EU by negotiating closer political and trading ties if it wins the next election, Sir Tony Blair has said.” Quote in the telegraph.
Isn’t this just what it’s all about John, align us back, give in to free movement, 18-30 will be just the start. Give the EU free Higher Education and Higher Education in England with English loans £10bn per year all the student costs your party never talks about the money you have now started to save by not doing this, why don’t you tell people? For years we’ve been keeping this going during the divorce, that is now finally over and suddenly we’ve got to give it all back for free.
The BoE just seem to be working with the EU zealots to bring our country down, the only reason for that can be to realign as people get more desperate as silly decisions are slowing the economy, high taxes are curtailing the middle classes whose lower spending in the economy is then losing retail and restaurant/pub jobs, this general repeated mantra that nothing is working is effective and excusing poor public services. We take far too much for granted. Any month now we’ll be told we’ve got to consign ourselves to the outer ring of the EU at fantastic cost because we’re the sick man of europe as our peers were told in the 70s, first you have to bring down.
Yvette Cooper says she can stop the boats from France, easy peasy, how I wonder by just giving everyone back their free passes, don’t pass go, get on a plane and arrive and we’ll give you a nice new house.
April 22, 2024
Why doesn’t your party make you Chancellor? You have been around long enough to run this country for the good. I am going to write to my MP (Mr Bhatti) and tell him to pull his socks up and get you into a strong position to represent us, not on the back benches.