Since lockdown began in April, the state has borrowed no less than £285 billion, taking on debts, over eight months, around twice what we typically spend during an entire year on the NHS. UK government debt now totals well over £2 trillion (2, followed by 12 zeros) – bigger than annual GDP, a first in our post-war history.
Lockdown costs the state billions a week, in support for furloughed workers and desperate firms. Our stymied economy, meanwhile, struggles to generate tax. That’s why, with restrictions set to last until Easter, we could end up borrowing £400 billion during the 2020/21 fiscal year alone – four times what we took on in the immediate aftermath of the 2009 financial crisis.
After that meltdown, the Bank of England announced £50 billion of quantitative easing – a “temporary, emergency measure”, creating money out of thin air to ward off a banking collapse. But QE boosted share prices and, when used to buy government bonds, helped the state to borrow cheaply. Powerful City institutions and ministers liked that – so the programme continued, expanding eight-fold. By the end of 2019, QE had reached £425 billion, with the Bank of England owning around a third of the entire stock of government debt.
Since lockdown, though, QE has gone into overdrive, surging another £450 billion. With no parliamentary debate and barely any press comment, our central bank has, throughout this pandemic, been buying government debt twice as fast as during the aftermath of the sub-prime collapse.
By far the most dangerous and controversial economic policy of our lifetimes, post-Covid QE has exploded beyond anything previously envisaged. The historic precedents of what we are doing are clear and undeniable. And the lack of discussion and transparency surrounding this policy is utterly mad.