According to the latest Bank of England weekly report, published yesterday, total balances in central bank reserve accounts were £641 billion on 4 November 2026.
Why does that matter? That's because the Bank of England base rate rose by 0.25 percentage points yesterday.
Assuming the Bank of England continues to remunerate all reserve balances at its base rate, this suggests the interest paid to those banks on those balances will increase by £1.6 billion next year.
Now let me contextualise this. Only a week or so ago, the Budget increased taxes on our banks, prompting many protests from them.
According to the budget, that time-limited tax increase will raise £1.475 billion.
Yesterday they collected £1.6 billion from the UK state to cover those costs, with the promise that more interest rate increases are on their way, which will only add to their unearned gains.
What is the reality then? It is that these banks are laughing all the way to the bank, quite literally, taking us all for a ride in a system rigged in their favour, which our politicians persist in permitting, hoping we will not notice.
Never forget to ask who this country is run for, and do not doubt it is not you.
The time for reform of central bank reserve accounts and the interest paid on them has been overdue for a long time, but now it is urgent. When will this bank robbery end?
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And the Chancellor could simply have taxed interest on reserves in the budget – but didn’t.
They are taxed.
But they are still winning.
A very good point Richard and listening to R4 I was hoping you would come on and provide your thoughts on the rate rise. Alas it didn’t happen. Someone needs to point out the £1.6bn freebie and more importantly why these buffoons keep droning on about the bondmarkets driving up interest rates then once a month tell us what rate the BoE have actually set this month? Make your mind up. Someone needs to skewer them like they did to Jared Bernstein on “Finding the money”.
They have my number
I am not surprised. On last night’s Channel Four News the gormless governor of the Bank of England was interviewed and he was asked if he was worried about the protests in France. His response? Yes, because it has caused unrest “in the markets”. If that did not tell the viewers where his priorities lie nothing will. No mention of the social cost or the potential for these protests to intensify. No recognition of what is happening elsewhere or what had just happened in the US midterms. It is like we have Marie Antoinette living in Threadneedle Street. Bella ciao!
Agreed
Thanks again for an incisive article.
Might the financial manipulations of the Bank of England indicate the significant possiblity of the following?
1) Decisions are affected by the socio-economic contexts of the decision makers.
2) Despite financial activities/transactions involving lenders and borrowers being the reality, the representation of both is not (obviously) demonstrated.
3) The balance of benefit always goes to the financial group of our society.
4) Recent and current governments are more concerned with the welfare of the members of the country’s financial group than with the welfare of the citizenry and their children.*
5) It might be more equitable for all in “our” society if Mr. Robert Dahl’s model of societies, currently presented as democracies, were viewed as polyarchies with competing groups, all of which require reasonable equity of socio-economic living contexts.
P.S. AI Overview states, “Increases in the Bank Rate and overall borrowing costs contribute indirectly to child hunger.”
A good angle on this Base Rate rise.
Whilst “remuneration of Reserve Balances” is a complicated issue and easy for most folk to leave it to one side but the scale really means this matters.
I would like to see the BoE Reserves renamed to make it clear who the beneficial owners are.
How about “Commercial Bank Deposits at the BoE”? CBD@BoE
I also wonder how many MP’s know what the BoE Reserves are?
But the commercial banks did not create these sums; the government did.
I think Rich S has a point. “Central Bank Reserve Accounts” is not very descriptive for the lay person. The word “Reserves” suggests some sort of “rainy day fund”. In reality it is just the money a Clearing Bank holds in its Current Account with the BoE. If described this way it might beg the question “why do they get the Base Rate on their current account while I get nothing?”. This perhaps, will help the lay person understand the issue.
True
Prof Josh Ryan Collins seems on the money – chimes very much with Richard on the absurdity of BoE raising rates at this time:<p>
https://x.com/jryancollins/status/2118374972007616837
“Like killing flies with cannons” is a good analogy. I’ll remember that!