RE: Barclays 80p17 Jan 2025 07:21
Well, to fund tax cuts for working people £40 bn - this was reported;
Tice argued that this tax cut would help fuel an economic recovery by encouraging people back into work. “You cannot tax your way out of a crisis,” he said, “you grow your way out of it”.
The tax cut would be largely funded by preventing the Bank of England from paying interest on the deposits commercial banks hold at the Bank after quantitative easing.
Through quantitative easing, the Bank bought government bonds from financial institutions, funded by creating new commercial bank deposits on which it had to pay interest.
When interest rates were low, the yield the Bank received from government bonds exceeded the interest it had to pay on new commercial bank deposits. However, as interest rates have risen, the costs of the programme now comfortably exceeds the return from gilt yields.
The government is on the hook for the difference, which, according to Tice, is estimated to cost around £35bn in 2024. Tice described it as a “voluntary decision to rip off the taxpayer and enrich City institutions”