The Bank of England’s quantitative easing (QE) program is on track to cost the UK taxpayer as much as the entire HS2 high-speed rail link that the government has scaled back on value-for-money grounds, according to a former Bank of England rate setter.
Michael Saunders, who was on the Monetary Policy Committee (MPC) between 2016 and 2022, said the £126 billion “lifetime cost” to the taxpayer of central bank money printing, calculated using the government’s own official forecasts, is “similar to the full HS2 scheme adjusted to 2023 prices”.
Saunders, now a senior policy advisor at Oxford Economics, drew the comparison in a paper to highlight the fiscal implications of the £895 billion of emergency QE between 2009 and 2021 to stimulate the economy after interest rates were cut as low as possible.
In October, Prime Minister Rishi Sunak scrapped the HS2 rail link’s northern leg as costs spiralled.
In November, the Office for Budget Responsibility (OBR) forecast a loss from QE of £250 billion over the coming years as the government sells off the portfolio in a process known as quantitative tightening, leaving a lifetime cost of £126 billion.