One thing has puzzled me since the introduction of “Quantitative Easing” (QE) in 2009. Between then and 2012 the Bank of England ‘bought’ £375bn of government bonds from their previous private sector owners.

This is a pretty sizeable chunk of the total Government debt of about £1.5bn – roughly a quarter. And it costs us nothing.

What you will find very hard to find anywhere on the Bank of England (BoE) or HM Treasury (HMT) websites is a very simple fact: HMT pays “interest” on these £375bn of bonds to the BoE which the BoE promptly hands straight back to HMT.

So to be clear – about a quarter of UK Government borrowing is absolutely free. It costs us nothing, nada. (The other three quarters isn’t much more expensive either).

BoE also has no plans to sell these bonds back to the private sector. In effect they are ‘dead’ and could be written off without upsetting anyone.

Just remember that when the Government is banging on about the “costs of borrowing.”