Who’d have thought the Treasury’s ‘Ways and Means’ facility at the Bank of England could cause so much excitement? The two parties have agreed a temporary extension of what is, in effect, the government’s overdraft account with the central bank. Cue great delight from advocates of printing money to pay for higher public spending, such as Positive Money, and equal displeasure from opponents. In reality, both reactions are overdone.
For a start, the ‘Ways and Means’ (W&M) facility is nothing new. Usually the balance on this account is less than £400 million (peanuts in this context). But the government did make more use of it during the global financial crisis in 2008, when the balance hit its previous record high of just under £20 billion. The UK has therefore been here before, so a precedent has already been set.
What’s more, this is still only short-term borrowing that…
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