Bank pays the price of quantitative easing

Bank pays the price of quantitative easing

QUANTITATIVE EASING: Bank pays interest to high street banks Photo credit: Flickr/Andrew Milligan sumo

The UK’s principal banks earned £9.3 billion (€10.87 billion) between them in 2023 thanks to the Bank of England’s quantitative easing measures.

This unearned income was the result of the Bank’s decision to print money, initially to boost the economy during the worldwide financial crisis following the collapse of Lehman Brothers and later during the pandemic.

The bank used the newly printed money to spend £895 billion (€1,046 billion) on buying bonds, generally from high street banks, between 2009 and 2021.  Lenders then deposited the money in Bank of England accounts where the interest has mounted up.

According to figures quoted in the Telegraph, four large high street banks received £9.3 billion interest on their Bank of England reserves last year, more than double 2022’s £3.9 billion (€4.56 billion).

Rising bank rates pushed up the banks’ payments, with NatWest telling a Treasury Select Committee that it received £2.9 billion (€3.39 billion) in 2023.  Lloyds Banking Group received £3.6 billion (€4.21 billion), with £1.9 billion (€2.22 billion) going to both Santander and Barclays.

When bank rates were low, the Bank made more from its bond investments than the interest it paid to banks, creating a profit that went to Treasury. Now that they are higher, Threadneedle Street is making a loss that is passed on to the Treasury and, ultimately, the taxpayer.

Quantitative easing will cost an annual £20 billion (€23.38 billion) until the first years of the next decade, the Bank calculates, equivalent to a third of the UK’s defence budget.

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Written by

Linda Hall

Originally from the UK, Linda is based in Valenca and is a reporter for The Euro Weekly News covering local news. Got a news story you want to share? Then get in touch at