Without the governor’s cooperation, any prospective government would need to change the Bank’s formal remit to enact the policy.
Reform’s BoE interventions don’t stop there though. As a result of its quantitative tightening policy, the Bank is currently selling large numbers of assets at a loss. Reform would rather if the Bank waited for them to mature so that their face value could be returned fully.
Unless QT stops immediately, Reform said, the BoE will incur another £50 billion of losses, matching the £50 billion it has already incurred from the policy in 2023.
“I have been raising this for over 12 months,” said Reform chairman and former asset manager Richard Tice. “The fact that neither the Chancellor, nor the Treasury, nor the Bank of England have proved why I am wrong, but instead have been silent on this issue, is because they are embarrassed to admit that I am right,” he said.
Not everyone was convinced, though. Despite being name-checked by Tice in the press statement, Paul Johnson, director of the Institute for Fiscal Studies, distanced himself from the policy, saying it would raise “much less than half” of the £40 billion proposed, and even then only for a short while, as the amount saved would fall as the BoE cuts rates further.
“The many tens of billions of tax cuts proposed would, therefore, need to be funded by definite tax increases or spending cuts elsewhere before long,” Johnson said via X.
The Bank of England declined to comment.
