Rishi Sunak was accused of spending £11 billion of taxpayers money paying too much in interest on servicing governments debt.
National Institute of Economic and Social Research (NIESR) stated that the losses were result of chancellor failure to insure against interest rate rises on £900 billion of reserves created under the quantitative easing (QE) program.
Losses were reported to exceed amount what conservatives blame former Chancellor Gordon Brown of loss when he sold some of UK gold reserves at rock bottom prices.
Institute director Professor Jagjit Chadha told the Financial Times that Sunak’s actions left country with “huge account and large constant interest rates rate risk”.
Labor said the losses were “astronomical” and blamed government of “playing fast and free” with in public finance.
In response, the Ministry of Finance stated that it has “clear financing strategy” in place meet the government’s funding needs.
According to the FT report, the bank of England (BoE) created £895bn of money through the quantitative easing program of which was used for buy government bonds from pension funds and other investors.
When these investors invest the proceeds in commercial bank deposits with the Bank of England, the bank had to pay interest on official interest rate.
Last yearwhen official rate was still 0.1%, NIESR called for government insure cost of maintenance of this debt against in risk of rising interest rates, converting them into government bonds with longer repayment period.
Chadha said now they’ve calculated that Sunak failure listen to their advice despite being regularly warned about the risks of higher inflation and interest rates on Expenses of serving governments debt – It was cost taxpayers £11 billion.
Shadow treasury minister Tulip Siddiq, said: “These are astronomical sums for chancellor to lose, and goes to work people collection up check for his cruel extravagance while he increases their taxes in middle of a cost-of- life crisis.
A Treasury spokesman said: “There are longstanding agreements regarding asset purchase funds – to date, £120 billion has been transferred to HM Treasury and used to reduce our debt, but we have always been aware that at some point direction of these payments can need reverse.
“We have clear financing strategy meet the government’s funding needs that we set regardless of bank of monetary circulation of England policy decisions.
“It for monetary policy committee to accept decisions on quantitative easing operations to meet the targets in their powers and we remain fully committed to their independence.”
