With badly performing branches of government like the taxpayer owned Bank of England it is important to watch what they do more than what they say. Significantly this month they are not selling any medium and long dated bonds, interrupting their disgraceful loss making sales programme. I guess they took this decision because a volatile bond market unhappy about the UK growth wrecking budget and Trump tariffs could tumble on the back of official selling.
Maybe they have now worked out that their announcement of a major sales programme of bonds on the eve of the 2022 autumn budget did help drive the market lower, leading to the predictable LDI plunge caused by poor regulation of pension investments.
The Bank bought far too many bonds at excessive prices well into post lockdown recovery. It has wrongly been selling off some of the long bonds which have the largest losses instead of just running down the bond portfolio as they mature. In 2024-5 they sent an astonishing bill for £38 bn of losses to taxpayers, swollen by unnecessary sales.
Thank goodness we have been spared at least one month of these excesses. Long bonds are often trading at under half the Bank’s purchase cost given the big hikes in rates the Bank has put through.
April 14, 2025
Good Morning,
When you run a trade deficit and a budget deficit, AND you clearly have self-destructive economic policies formulated by politicians who don’t know what they’re doing, is it any surprise foreigners don’t want to lend you their money.
April 14, 2025
Indeed. Self destructive policies from every direction – a devalued currency, vast over taxation, vast over regulation, a mad war on plant food, intermittent and very expensive energy, the workers rights act, the wars on private schools, landlords, motorists, small and large business, the rigged markets in housing, education, healthcare, energy, transport…then all the largely low skilled (and often with criminal intent) immigration levels.
April 14, 2025
Let steel deliver the decisive blow to Red Ed and the entire net zero edifice
Both economically and politically, the green agenda is now a millstone around Labour’s neck
Tim Stanley today in the Telegraph.
It is a millstone around everyone’s necks Tim – just as it was for Cameron, Net Zero May, Boris and his theatre studies wife, PPE dope Sunak… but Kemi the “Engineer” is still a net zero fan. Albeit a “Let’s drive over the cliff but a bit more slowly than Ed Miliband” one. Rather like the Sunak agenda that proved to be so politically popular when he, insanely, went to the country six months early! Giving an even worse government with a huge majority.
Cheap, reliable, on demand energy is vital for the economy, for our ability to compete, for defence, to build houses, buildings, industry… and for living standards.
April 14, 2025
LL : “Cheap, reliable, on demand energy is vital for the economy, for our ability to compete, for defence, to build houses, buildings, industry… and for living standards.”
Yes, and this is why they’re pursuing Net Zero. Watch the ES&NZ Committee meetings where they discusss curbing energy use, redistributing wealth, introducing rules and regulations to deal with intermittent and expensive electricity, how it is necessary to make gas more expsensive to drive the uptake of evs and jeat pumps….etc…etc…
April 14, 2025
PS :
There is no evidence for climate change according to the IPCC (Table 12 in Chapter 12 of the WG1 report) only some mild warming of 0.14 degrees C/decade according to UAH satellite data. Happer & Wijngaarden have shown that the IPCC’s radiative warming theory gives only a warming of 0.7 degrees C for a doubling of CO2 because there is already sufficient CO2 in the atmosphere to absorb all the planet’s wmitted IR radiation and Shula & Ott have shown both experimentally and theoretically that the IPCC’s radiative theory is invalid. CO2 is a trace gas (0.04% of the atmosphere) and the Net Zero supporters want to eradicate this plant food, upon which all life on the planet depends, from the atmosphere claiming it is a pollutant! You couldn’t make it up.
April 14, 2025
Once thing for sure is that with current technology solar and wind are not cheap or reliable not even do they save much CO2. Today is a good day for renewables with circa 40% coming from solar and wind (during the middle of the day that is). But even that is only about 8% of total human energy needs.
April 14, 2025
Today, as at 15:00hrs, we’re import 19.5% of expensive energy from France ….no such thing as cheap energy in the UK
April 14, 2025
The BoE has just realised we have a labour government.
April 14, 2025
Well not much difference from big state, vast immigration, tax to death, regulate to death, net zero loons & deluded socialists Cameron, May, Boris, Sunak then just even worse and with a huge majority too!
April 14, 2025
We have a massive trade deficit because rather than use our own resources and collect tax from their extraction we import
Nothing highlights the absurdity of net zero than relying on foreign governments to supply gas, oil coal and electricity at spot market rates when we are sat on 200 years worth.
Idiots the lot of them.
April 14, 2025
They’re not idiots, they’re ideologues. They believe in sacrificing the interests of the British people for “the greater good.” They have signed us up to UN Agenda 21 and Agenda 2030 and have volunteered the British people to be the sacrificial lambs for the “de-industrialise-the-west and transfer wealth” policy. It’s why the Uni-Party has closed ranks and has been operating a CONsensus policy, so we couldn’t vote against it.
Charles stood up at the WEF and endorsed it. You can watch it on YouTube. He supports the policy of reducing “his subjects” living standards, whilst personally making a very pretty penny from the occasionally useful windmills on the sea-bed.
April 14, 2025
IW :
It doesn’t make sense to most people because they do not understand the real purpose of Net Zero.
April 14, 2025
Bid to cover ratio for UK bonds is typically 3. No idea whether these are foreign or not, but the demand is there.
April 14, 2025
The 10 year price is fluctuating disturbingly – and sales are needing higher yields. Not good news for Rachel.
https://www.reuters.com/markets/europe/bank-england-postpones-long-dated-gilt-auction-due-market-turmoil-2025-04-10/
April 14, 2025
Let’s hope they get their fingers burnt speculating on a Commie government
April 18, 2025
Would a government buy its own bonds then classify and keep this data secret?
April 14, 2025
Good morning.
This is a consequence of the Scamdemic and the ‘Stay at home and save the NHS’ policy of the government under Johnson and Sunak. All those people who thought that staying at home and being paid by the government to do so (furlough) was a no cost option are now having to pay that money back, plus interest, via taxation. Because as our kind host points out (see above) it is we taxpayers that are paying it.
Mugs and their pots and pans.
April 14, 2025
“Can” do damage? They clearly do vast damage, yet another tax in effect by devaluing you pay and savings and pushing up interest rates. What will the government admit next:- Net Zero is a scam, gives us rip off intermittent energy and destroys the economy? Government spending/wasting nearly 50% of GDP is vastly damaging – it should be half, low skilled immigration level make GDP per cap lower… How is that other dope and net zero fan one Mark Carney getting on, amazingly still the favourite it seems!
April 14, 2025
This is the same Bank of England source of crazy decision making where Rachel of Accounts trained to make even worse decisions in her damaging budgets.
April 14, 2025
Hi sir John
Why have not the bank of England leaders been dismissed for gross negligence they personally should be held responsible for the losses even the man on the street would sell a pound for fifty pence
April 14, 2025
Better late than never. Perhaps the prospect of recession contributed to the decision? Trump tariffs will have a direct impact on exports to the USA, as JLR’s suspension of exports there demonstrates. In addition there will be collateral damage to all of the economies of other markets around the world to which the UK exports. In the aggregate this will be very damaging for the exporters.
April 14, 2025
I thought from your headline that we were getting a confession, tearful and contrite. That is after all what we deserve from the Bank.
Even so, and as you note look at what they do, perhaps this pause would be sufficient evidence for a judge to grant an injunction against resumption of sales at huge losses?
Perhaps rather than the Bank at last seeing the light, Wrecker Reeves has withdrawn the indemnity that covers losses?
April 14, 2025
One simply has to ask why the BOE adopted such a policy when it did not have to, as such Bonds were no where near their maturity date.
Why did not any of our Chancellors at the time question it ?
Why has this loss/Policy never even been mentioned in any Budget.?
Why has this loss/policy never been fully explained to the Taxpayer ?
Why have all Chancellors/Prime Ministers even allowed such ?
April 14, 2025
Yes exactly. Why were they doing it ? Was it a “hidden” way of getting some of the anti-inflationary effects of direct interest rate rises but without the public pushback ?
April 14, 2025
James Gillray’s 1797 cartoon ‘The Old Lady of Threadneedle Street’ envisioned the Bank well.
Arther Dayley referred to his risky choices as being limited by ‘her indoors’. Horace Rumpole described his restrictions as ‘She who must be obeyed’. One was dodgy, the other legal, but whatever attracted them in the first place was clearly out of date.
Gordon Brown let the Bank run loose. Some better-organised relationship is needed before bliss is ever likely to follow.
April 14, 2025
Big hike in rates? Rates now are historically quite low. Mediumish – I would say. Allowing the BoE to keep rates close to 0% for 12 years was a huge mistake. In normal times, investors would look for a yield (dividends) of about 4% on their (stock market) investments. Why lend a government money for 10 years and receive (say) 1% when you could (almost certainly) get 4% tracking an index – and make a capital gain.
The era of ultra low interest rates was a huge mistake – tolerated by the government of the day (addicted to cheap debt) and which suckered a lot of young people into taking out massive mortgages at stupidly low interest rates. Now those young people are devoting much more of their income into servicing the interest on their mortgages – reducing demand in the economy and stifling your precious growth.
April 14, 2025
Is there any surprise that the Chinese wished to shut down Scunthorpe? Surely it was in direct competition to their own over production. Whatever induced Johnson to sell to them in the first place, and to ship coal from Japan. Will they now open the coking coal mine in Cumbria? I wouldn’t bet in it.
April 14, 2025
They are saying that the coal from Cumbria isn’t suitable for Scunthorpe. Why? I thought the mine was to extract coking coal specifically for steelmaking. Is the Scunthorpe blast furnace particularly fussy?
April 14, 2025
BE :
Far worse is the Net Zero plan to make our country dependent for its electricity (and eventaully all our energy when the transition is complete by 2050) upon Chinese supplied wind turbines, solar panels, batteries and the metals and minerals for generators, motors and cabling and now even the steel (and concrete?) for the wind turbine columns and bases. As well of course for evs, heat pumps, glass, chemicals, fertiliser….
April 14, 2025
Why would all our competitors not wish to shut down the U.K. given the chance?
April 14, 2025
I expect that even now most people have not grasped that one arm of the state, the Bank, owns masses of bonds issued by another arm of the state, the government, which in turn owns the Bank, so they do not think it a bit odd.
One doesn’t know what the financial regulator might have made of the QE ‘money go round’ scheme, whether it might have seen it as the government rigging the market in its own bonds, because it was not allowed to interfere.
It is quite interesting to read the Explanatory Memorandum for the hasty Order exempting the Bank’s Asset Purchase Facility from regulatory scrutiny, notably it was claimed that it would have ‘zero’ impact on anything:
https://www.legislation.gov.uk/uksi/2009/118/pdfs/uksiem_20090118_en.pdf
We are still living with the legacy of Gordon Brown’s profligacy, it will be one small reason why we are struggling.
April 14, 2025
There are local elections in May and the Red and Blue Branches of the Westminster Uni-Party are expecting to get a very severe kicking. Previously, that meant the Yellow Branch would hoover-up the disgruntled and the Uni-Party would trundle on causing economic destruction everywhere it went, but that system is no longer operating as well as the Establishment intended.
So it is behaving cautiously this month. They really don’t want any more nasty economic news just before the crosses are written. That’s all. I predict that the usual service of doing everything they can to destroy the British economy will resume next month.
April 14, 2025
+1
April 14, 2025
Donna :
Correct.
April 14, 2025
It’s quite extraordinary that the only person we hear anything from on this topic is Sir John. What’s the problem – is it not the done thing for the opposition to criticise the Bank of England? The Conservatives – and Reform – should be onto this.
April 14, 2025
Maybe you have to understand the subject before discussing it? Perhaps that’s why we are left with one line voice?
April 14, 2025
If the government had any sense they’d put a legal instrument in place to stop bonds being sold at a huge loss. The bank should be forced to hold on to the bonds until market rates have improved, once the cycle of actions regarding tariffs has reached a point of fairness.
It is about time parliament took responsibility for overseeing the Bank’s actions, as they are supposed to be doing, rather than allowing it to flail about and make our economic situation worse. We simply cannot afford the losses thrown our way by the Bank.
If the Chancellor had any sense, she would stop the losses from Bond sales and then claim it as a success in helping to keep spending down – that way she wouldn’t need to raise any more taxes!
April 14, 2025
Have you ever heard any justification for the Bank’s bond selling policy?
April 14, 2025
But what are reasons behind the BoE acting as it did? Does anybody know? Have they even justified their actions?
April 14, 2025
This was never a “mistake”. It was deliberate.
April 14, 2025
Correct. Part of the capitalising the profits, socialising the losses policy. Chancellor Hunt was signing off the process, just as Rachel-from-Accounts has been.
April 14, 2025
Here’s hoping that being in charge of British Steel might, just might, lead Starmer to conclude that no business can prosper with the highest energy bills in the known universe. Could he finally realise that whatever daft decisions that Rachel from Complaints makes, he hasn’t any chance of being re-elected if Milband and net zero are left in place.
Let’s hope so !
April 14, 2025
Chris S :
Net Zero is of vourse designed so that “no business can prosper” and hence it will continue. For there is no climate crisis/emergency/breakdown. The UN Sec Gen is incorrect when he says “we are in an era of global boiling”. Neither are the oceans boiling as described by Al Gore. In 2007 the BBC breathlessly reported that Arctic summers would be ice free by 2013. Anyone can check the data for themselves and see this is all total nonsense.
April 14, 2025
Farage has pointed out this nonesense in many occasions. I believe it was him that woke parliament up to the scam.
Reply. No it was me that told Parliament and the government about this from when they began it.
April 14, 2025
I can remember you writing about this years ago, and conming back to is several times.
It has never made sense ! How could any chancellor have allowed it to continue ?
Do any of them have any commons sense at all ?
April 14, 2025
I would not use the word ‘scam’ to describe the Bank selling gilts at low prices, not unless the Bank or its staff stood to gain by doing so. I might use that word to describe the ‘quantitative easing’ scheme by which the Bank came to possess such large quantities of gilts, in effect serving as a captive investor in government bonds to enable the government to borrow the vast sums it needed to cover its budget deficit.
April 14, 2025
As I have written before, why has Andrew Davies not been sacked? If you tolerate mediocrity, that is what you will get. That applies to the BOE Governor and his top executives, but it also applies to every member of the current government. Sadly, it also applies to previous governments.
How can any MP sit in parliament, happily nodding through costly Net Zero legislation, without demanding a full cost analysis?
Why has no MP, except Sir John, raised the question of BOE bond losses?
But, not to worry, our steel industry’s future lies in the capable hands of a business Secretary who has never been in business in his life, and another one with a dodgy CV, plus a PM and Chancellor who have not got a clue!
April 14, 2025
Spot On Keith
April 15, 2025
@ Keith
Andrew Bailey surely?
April 14, 2025
Its a colossal sum, and I don’t hear much from the government/opposition, nor from the whole of parliament about this issue ….£32bn !!!
April 14, 2025
GC : Yes, it’s a large figure but small compared to the sums spent on the insane Net Zero project.
April 14, 2025
Great speech by Sir Edward Leigh on steel.
Humble, authentic, charming and with good humour!
Lovely man / gentleman (even if I don’t agree with him on everything).
April 14, 2025
Appalling national disgrace and waste of precious resources by the Bank of England management who are irresponsible and never held to account, unlike the millions of poor overtaxed folk hounded for pathetic petty cash by HMRC by contrast. Two tier system. P45s for Rachel Reeves and her fellow big time wasters beckons.
Merchant bankers had a bad reputation but this is truly off the scale and needs more publicising by MSM and needs Reform.
Musk would have targeted this nonsense and fired these clowns immediately. Instead the government downplays this to avoid embarrassment rather than display their woeful financial ignorance.
The excuse “confidence in the BOE has to be protected” is rank hypocrisy.
April 14, 2025
Why is it that those working on the public payroll, which includes of course the 300+ quangos, never get sacked let alone prosecuted, for laziness, negligence, incompetence, malfeasance, corruption, misbehaviour, insubordination or even treachery?