Chancellor Rishi Sunak has been slated for failing to insure against increasing interest rates on debt racked up through the quantitative easing programme.
Rising interest rates are expected to cost the taxpayer £11bn said The National Institute of Economic and Social Research (NIESR), while a chance to act when rates were low was missed by the chancellor.
NIESR's Jagjit Chadha told the Financial Times that Sunak's actions left the country with "an enormous bill and heavy continuing exposure to interest rate risk".
Although it was the Bank of England’s (BoE) decision to implement QE, Chadha said that In 2021, when rates were just 0.1%, the government could and should have insured the cost of servicing this debt against the risk of higher interest rates.
"Such a lost opportunity is an unnecessary cost to the public finances at a very difficult time," the think tank commented.
Quantitative easing saw £900bn of reserves used to pump money into the UK economy through purchases of corporate and government bonds from pension funds and investors.
In a statement to the BBC, The Treasury said NIESR's proposal would undermine this independence and be "hugely damaging" to the credibility of how public finances were managed.
"Proposals such as this risk undermining the independence of the Bank of England and forcing commercial banks to swap reserves for gilts would be an act of financial repression," a Treasury spokesperson said.
The Bank of England is independent of the government.