There is one number virtually no-one* has mentioned in all the coverage of the Budget – £375bn.
£375bn is the amount of government debt (bonds) held by the Bank of England. Part of the reason for Mr Osborne’s perpetual smirk may well have something to do with this £375n number.
These government bonds were purchased – from ‘the market’ and private sector financial institutions – as part of BoE ‘quantitative easing’ program. It was their way of pumping ‘created’ money into the financial system by buying up Government bonds.
(We’ll leave aside the fact that as these bonds may well have been owned outside the UK it meant a lot of the ‘quantitive easing’ went straight out of the country).
At the moment this £375bn represents around a quarter of all Government bonds – or put another way, about 1 in 4 of every pound of the national debt is owned by the Bank of England. Continue reading