UK Treasury’s lack of foresight costing £11bn, says report

In a report by a think tank (NIESR), UK Finance Minister Rishi Sunak has been accused of wasting £11 billion of taxpayers’ money on UK loan interest, which could have been covered up better. The British Treasury did not hedge the country’s debt against rising rates on monetary reserves of around £900 billion created through the Bank of England’s quantitative easing program at the peak of the pandemic, according to a report obtained by AFP on Friday.

Treasury claims to have “a clear financing strategy”

“The governments of many countries are unprepared for a long period of high inflation and rising interest rates,” said this report by the National Institute of Economic and Social Research. “The UK is drawing”. The NIESR says that in July 2021 it recommended a form of “insurance policy” to the Treasury against rising rates and the cost of debt, which would allow the Treasury to “extend reserves from commercial banks to the Bank of England with new treasuries”. -Suggests to offer bills with short-term or long-term maturities at fixed interest rates”.

Because the Bank of England must remunerate these reserves at current interest rates, which have risen from 0.1% currently to 1% during the previous year. “We anticipate losses over the past year” due to the fact that the Treasury did not follow this advice of “about £11 billion”. Such a lost opportunity represents an unnecessary cost to public finances in very difficult times,” the report emphasizes. The institute’s director Jagjit Chadha told the Financial Times that a lack of anticipation by Mr Sunak had left the UK “a large bill and continued high exposure to interest rate risk”. The opposition Labor Party called this reduction “astronomical”. A spokesman for the British Treasury, for its part, considered the £11 billion figure impossible” in an email to AFP. He further added that the NIESR proposal “harmed the independence of the Bank of England” and caused commercial banks to face “financial repression”. It was forced to swap reserves for debt, which “damaged the economy.” British as a whole. The Treasury also claims to have “a clear funding strategy” for the government’s financial needs.

See also  McLaren has confirmed the launch of the ‘next generation’ hybrid 2021

You May Also Like

About the Author: Forrest Morton

Organizer. Zombie aficionado. Wannabe reader. Passionate writer. Twitter lover. Music scholar. Web expert.

Leave a Reply

Your email address will not be published.