Public Expenditure

(asked on 27th January 2021) - View Source

Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the impact on the sensitivity of public sector borrowing costs to interest rate changes as a result of quantitative easing affecting the maturity of public sector funding; and what plans they have to publish comparative sensitivity data from the time since quantitative easing was first introduced.


Answered by
 Portrait
Lord Agnew of Oulton
This question was answered on 10th February 2021

As noted in the Office for Budget Responsibility’s (OBR’s) November 2020 Economic and Fiscal Outlook (EFO), the Bank of England’s quantitative easing programme lowers government borrowing costs but shortens the average maturity of public sector debt and increases exposure to changes in short-term interest rates.

The OBR publish estimates of the sensitivity of debt interest spending to changes in interest rates in their EFO.

We have strong independent economic institutions and a well-established macroeconomic framework that ensures we are well placed to deal with risks to our public finances.

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