Osborne’s windfall doesn’t change big picture

The Government today agreed with the Bank of England to transfer to the Exchequer the excess cash held in the Bank’s quantitative easing (QE) facility. This will leave the published borrowing figures looking healthier in the near-term, but is largely just an accounting change. The Chancellor will not be using the extra money to fund a fiscal stimulus and the Exchequer will probably have to transfer money back to the Bank of England in the later stages of QE. And it will make little difference to the Chancellor’s chances of meeting his fiscal rules. Accordingly, the move does not alter the big picture.