I’m watching with amazement as Rishi Sunak defends his record on the economy at various Conservative Party Member hustings. He talks as if he were the only one that can “save” the United Kingdom, yet it is he who has destroyed our economy with his reckless “schemes” and actions while Chancellor of the Exchequer. But what was he to do, he had to fight the pandemic, didn’t he? It is worth noting here, that during the pandemic, Germany spent far less (borrowing £130 billion compared to UK’s £450 billion), far fewer people died of Covid, and the population of germany is much higher than the UK’s.
Rishi Sunak borrowed £450 billion of money raised by the Bank of England in its latest Quantatative Easing programme. The money borrowed is linked to the Bank of England base rate which was just 0.1% during the pandemic. The base rate is now 1.25% or twelve and a half times higher. On 4th August, it is widely accepted that the Bank of England will raise the base rate to 1.75%. Rishi Sunak signed a “Deed of Indemnity” to release that QE programme. The British taxpayer is now on the hook for billions of poundsworth of interest. In June, Rishi Sunak borrowed £23 billion to pay £19 billion in debt interest and that was a record for a single month. I doubt the record will remain unbroken this year. The forecast for debt interest in this financial year (22/23) has been revised to £104 billion, that is debt INTEREST, not the deficit.
But, all this could have been avoided. It is said that Rishi Sunak could have insured the QE debt against rising interest rates, but he thought this would be “too risky”. Just another catastrophic miscalculation by the most incompetent Chancellor this country has ever seen.