Labour has accused the government of “catastrophic financial mismanagement” and claimed it has “lost” £251bn from the value of assets created to rescue the banking sector after the 2008 financial crash.
The party said analysis of recently published figures showed that a decline in the value of the Bank of England’s assets – over which the Treasury acts as a guarantor – was a huge loss to taxpayers, “equivalent to 10% of gross domestic product (GDP) in 2022, or the entire GDP of Scotland and Wales combined”.
In a report assessing the impact on the exchequer, Labour said the problem began when Rishi Sunak was chancellor in 2020 and worsened in the aftermath of former chancellor Kwasi Kwarteng’s disastrous mini-budget in September last year.
They mean that golts are worth less than when they were bought because interest rates have risen. Well, OK – but that’s the price of just printing money to spend. Don’t print the money and you’ll not make the loss.
This does also mean that Labour thinks there should have been more austerity….
“there should have been more austerity….”
Wotcha mean, ‘more’? Any at all would have been welcome.
GovUK liabilities on one side, BoE assets t’other. A wash, shirley?
@ dearieme
Yes, a decline in the rate of increase in government spending is not austerity.
A bit like saying inflation is down from 10% to 7% doesn’t mean prices have fallen – just not risen as quickly.
How about the rise in the number of civil servants and their pay grades..?
If it were a normal bank the BOE would be in trouble. That indemnity is important. They should have been doing some Qt much earlier, not lowered to 25bos “due to Brexit” and not been muppets during the plague.
They lost control as they don’t really know what to do. The billions of paper losses are symptom not a cause
“If it were a normal bank the BOE would be in trouble. That indemnity is important. They should have been doing some Qt much earlier, not lowered to 25bos “due to Brexit” and not been muppets during the plague.”
Allowing QE introduced the BoE into politics, because he who controls the money supply in effect rules the country. Making decisions about whether or not to have another bout of QE over Brexit, and whether or not to fund the Covid insanity were political decisions, not monetary ones. In a world where QE did not exist governments would not have been able to fund the covid madness, so a decision to fund it via QE is a political decision to enact that policy. Thats why our host was utterly wrong back in 2009 to describe QE as some purely wonkish monetary operation that can be reversed when needed, because in politics you can’t reverse spending money with the same ease you can spend it. And QE puts the BoE firmly in the politics business.
“ Labour has accused the government of “catastrophic financial mismanagement”
Well it is an area of expertise at which Labour excels, having been perfecting financial mismanagement since 1945.
Jim – “the BoE firmly in the politics business”, see also the OBR, the EU (Stability & Growth Pacts) and probably any number of other “independent” and “non-political” things.
So you think the BoE is directed by politicians? Wrong end of the telescope, says I.
“So you think the BoE is directed by politicians? Wrong end of the telescope, says I.”
No, I say the people who run the BoE are now the political leaders of the country. The nominal government of elected representatives are indeed being ordered around by the political whims of the BoE staff. If they see a policy they agree with they fund it via QE, see covid spending. But if a government suggests borrowing money to fund tax cuts, nope, not funding that, see Liz Truss. Their decision making is now entirely political, not economic. Whether they turn the spending taps on depends entirely whether they agree with your politics.
don’t get why labour have fallen into the Kwarteng was a disaster trope. Surely they should be attacking the current wombats. The ones they want to oust! OK, I get that the combined competence of the Labour party is around zero, but then surely that is about average for the political classes. Besides which, it is easy to see that JC Hunt and his undemocratic mentor have been a lot lot worse.