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The Bank of England nearly financed the deficit. Does it matter?
Bank of England officials may have been surprised when they noticed their asset purchases almost matched state borrowing in 2020. Between 1 January and 31 December, the Bank acquired £290bn of gilts. In comparison, net gilt issuance will likely be around £360bn for the same period. By the end of the financial year the Bank will have bought around £320bn-£330bn of gilts, with the budget deficit on track to land in the region of £350bn-£400bn. When the UK government announced a rise in the amount it could borrow from its Bank of England overdraft – the Ways and Means facility – a slew of articles on monetary ... (full story)