LONDON: A British minister on Friday denied a claim that the Treasury’s decision not to insure against Bank of England interest rate hikes had cost taxpayers £11 billion ($13.7 billion dollars) during a cost of living crisis.
“The Treasury has been wrongly accused of wasting billions of pounds,” John Glen, an assistant Treasury minister working for Finance Minister Rishi Sunak, wrote on Twitter.
The National Institute for Economic and Social Research said Sunak failed to insure against recent rate hikes on £900bn of cash stimulus created by the Bank of England to support the UK economy before and after the pandemic.
The BoE and other central banks around the world are raising interest rates in an attempt to curb soaring inflation.
NIESR Director Jagjit Chadha said the Treasury was left “with a huge bill and continued high exposure to interest rate risk” as the BoE prepares to raise its key rate again the next day. next week.
The institute pointed out that the interest rate insurance that Prime Minister Boris Johnson’s government could have taken out last July had become much more expensive.
“We estimate the loss over the past year at around £11bn. Such a missed opportunity is an unnecessary cost to public finances at a very difficult time.”
With inflation in the UK at its highest level in 40 years – eroding workers’ wages – millions of Britons are suffering from a cost of living crisis.
The government says it is limited in the financial aid it can now offer after spending billions of pounds to help people through the pandemic.
Consumer prices for goods, particularly energy and food, have surged around the world as economies reopened after lockdowns and following the big producer’s invasion of Ukraine. of Russian oil and gas.