The Bank of England hasn’t already spent £65 billion following mini-Budget

5 October 2022
What was claimed

The Bank of England has spent £65 billion on purchases of long-dated UK government bonds as a result of the government’s mini-Budget.

Our verdict

The Bank of England announced on 28 September that it was prepared to spend up to £65 billion on long-dated UK government bonds over the course of 13 days, amounting to £5 billion each day. At the time of writing it has spent around £3.7 billion over five days.

Perhaps [chancellor Kwasi] Kwarteng can now sit in a room and be forced to count to 65 Billion which was the cost of his mistake.

The Bank of England like grown-ups stepping into a nursery wrecked by toddlers, spent 65 billion pounds to restore market functioning.

‘Imagine losing £65bn and keeping your job’: Twitter reacts to tax U-turn

Claims that the Bank of England has already spent £65 billion to support the economy following the government’s mini-Budget have been widely shared on social media. 

These claims are inaccurate and misleading. The Bank of England said on 28 September that it was prepared to spend up to £5 billion a day on temporary purchases of long-dated UK government bonds “to restore orderly market conditions” over a period of 13 days. 

If the Bank had spent the maximum, then spending would total £65 billion. 

However, the Bank has not spent the maximum. Over the course of the first five days of the Bank of England’s operation, around £3.7 billion worth of long-dated government bonds were purchased—rather than the maximum £25 billion that could have been spent over the same period. On 4 October, the Bank did not buy any bonds at all.

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What is a bond?

Bonds are basically IOUs. The government issues bonds for sale to raise money. The bond returns a fixed amount of interest each year and, at the end of the lifetime of the bond, the initial money paid is returned to the bond holder.

For example, someone holding “1.5% Treasury Gilt 2047” (gilt being what government bonds are called in the UK) initially bought for £1,000, would return the holder £15 per year (1.5%) until 2047, at which point the bond would ‘mature’ and the initial £1,000 would be returned to the holder.

There are other types of government gilts, but these “conventional gilts” make up most government gilts.   

Who claimed that £65 billion had already been spent?  

Claims the Bank of England had spent £65 billion on bonds were shared by politicians, newspapers and public figures. 

Labour MP Jess Phillips tweeted: “Perhaps [chancellor Kwasi] Kwarteng can now sit in a room and be forced to count to 65 Billion which was the cost of his mistake.” 

The Guardian published an article based on social media posts about the government’s actions, headlined: “‘Imagine losing £65bn and keeping your job’: Twitter reacts to tax U-turn”. 

A spokesperson for the Guardian told Full Fact the article “is a round up of satirical and political comment” , adding that the headline “is in quotation marks, quoting a couple of the social media posts embedded in the article itself”. 

The spokesperson added: “The Guardian's broader coverage makes it clear to our readers the detail of the situation elsewhere.”

LBC also repeated the claim in an article based on presenter Sangita Myska’s comments, quoting her as saying: “The Bank of England like grown-ups stepping into a nursery wrecked by toddlers, spent 65 billion pounds to restore market functioning."

Several high-profile Twitter accounts, including that of barrister Rupert Myers, author Emma Kennedy and writer and performer Jolyon Rubinstein also shared misleading claims that the Bank of England’s intervention had “cost us” £65 billion or that £65 billion had been spent or lost, each retweeted thousands of times. 

Ms Kennedy deleted her post and tweeted a correction after being contacted by Full Fact.

The misleading claim has also been shared on Facebook

With the help of Full Fact’s artificial intelligence fact checking tools, we’ve also identified claims made in social media posts by some politicians such as shadow chancellor Rachel Reeves and Liberal Democrat MP Sarah Olney which mention the £65 billion figure, though did not go as far as explicitly stating the money had been spent. 

While it is correct that the Bank of England was prepared to spend this amount, it’s important to point out that this sum has not actually been spent yet.  

Guido Fawkes reported that the BBC’s Nick Robinson had said the government had spent “65 billion to prop up the markets” but later issued an on-air correction saying the Bank of England had “promised they might, but have only spent two or three [billion] I’m told”. 

What did the government and the Bank of England actually do? 

On 28 September the Bank of England announced that it would make temporary purchases of long-dated UK government bonds, up to a value of £5 billion each working day, up to 14 October. 

That period covers 13 days in total, equalling £65 billion—a figure which was widely reported by the press after the Bank’s statement. 

The Bank of England said this was to “restore market functioning”, after a fall in government bond prices, which many have said was triggered by the government’s mini-Budget. 

This led some people to claim that the government and the chancellor had cost the Bank of England £65 billion. 

However, the Bank of England has not yet spent this amount. According to figures published by the Bank, it has so far spent around £3.7 billion over the course of five days. Under its maximum planned spending, the Bank of England could have spent £25 billion over this period. 

That said, the Bank’s purchase operation is still active, and this £3.7 billion figure may still rise. On 3 October the Bank issued a statement reaffirming its willingness to buy up to £5 billion of government bonds each day, though on 4 October it didn’t purchase any gilts.

Ms Phillips, Ms Reeves, Ms Olney, Mr Myers, Mr Rubinstein, and LBC have all been contacted for comment. 

Image courtesy of George Rex 

We took a stand for good information.

As detailed in our fact check, Emma Kennedy has already posted a correction on Twitter.

After we published this fact check, we contacted LBC and Jess Phillips MP to request corrections regarding this claim.

LBC added a paragrah with clarification on this claim to the bottom of its article.

Jess Phillips MP did not respond.

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