QE - UK Taxpayers to Cover £85-£100bn BoE Losses
Published by Campbell M Gold in Political · Tuesday 30 Jul 2024
UK Taxpayers to Cover £85-£100bn of BoE Losses.
UK taxpayers face a significant financial burden as the Bank of England’s Quantitative Easing (QE) program, which involved buying bonds to support the economy during the economic crisis and the pandemic, has resulted in horrendous losses. These losses are estimated to range between £85 billion and £100 billion-plus.
Due to an indemnity agreement between the BoE and the Treasury, the UK taxpayer will cover these losses. The higher interest rates have reduced the value of the bonds purchased under the QE program, leading to this situation.
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According to the latest estimates, UK taxpayers will have to cover losses amounting to £85-£199 billion that the Bank of England (BoE) incurred during its Quantitative Easing (QE) program, which began during the global financial crisis.
The losses result from the £895 billion QE bond-buying scheme, implemented between 2009 and 2021 to support the economy following the worldwide slump triggered by the Lehman Brothers bank collapse and the COVID-19 pandemic.
While the QE program initially reduced the Treasury’s budget deficit until 2022, higher interest rates reversed the impact.
The BoE is removing the bonds from its books, but £704 billion of gilts remain.
Based on the latest estimates by the Bank of England, QE is expected to incur approximately £20 billion in losses annually until the early 2030s, equivalent to a third of the defence budget.
Successive Chancellors have agreed to indemnify the BoE against any losses on the QE scheme, leaving the taxpayer entirely liable.
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