Deutsche Bank: The Bank of England's losses from bonds bought after the financial crisis will be major

The losses that the Bank of England (BoE) will record from the bonds it bought to support the United Kingdom's economy after the financial crisis will be "much higher than expected by the middle of the decade", estimates Deutsche Bank, according to CNBC.

At the end of July, Britain's central bank estimated it would ask the Treasury to block 150 billion pounds ($189 billion) of losses from its asset purchase facility (APF).

The program ran from 2009 to 2022 and was designed to improve financing conditions for companies affected by the 2008 financial crisis.

The Bank of England amassed £895bn worth of bonds while interest rates were at historic lows.

But the central bank began to withdraw from this position late last year, initially by halting reinvestment in maturing assets and then by actively selling bonds, at an estimated rate of £80 billion a year, starting in October 2022.

Both the Treasury and the Bank of England knew when the APF was implemented that its early profits (£123.8 billion last September) would turn into losses as interest rates rose.

However, the pace at which the central bank has had to tighten monetary policy in an attempt to temper inflation indicates that costs have risen beyond expectations.

Higher interest rates drove down the value of the government bonds it bought - known as gilts - just as the BoE started selling them at a loss.

British public finance data showed the Treasury transferred £14.3bn to the Bank of England in July to cover losses from its quantitative easing programme, £5.4bn more than the independent Office for budget responsibility in March.

Sanjay Raja, senior economist at Deutsche Bank, noted that a total of £30 billion has been transferred from the Treasury to the central bank so far since September 2022, and the amounts are expected to continue to exceed the government's forecasts of two reasons.

"First of all, interest rates have risen well above the levels assumed in the fiscal watchdog's spring forecasts. Second, the price of government bonds fell further, leading to further losses," explained Sanjay Raja.

The Bank of England has raised interest rates at 14 consecutive monetary policy meetings, taking the benchmark rate from 0.1% at the end of 2021 to a 15-year high of 5.25%. The market expects a 15th increase, up to 5.5%, at the next meeting of the Monetary Policy Committee.

• London delays the introduction of full border controls on imports of goods from the EU

The British government will postpone for another three months, until January 31, 2024, the imposition of comprehensive post-Brexit controls on imports of goods from the European Union, reports Euractiv.

The announcement in this sense was made on Tuesday by the London executive.

The UK left the European single market in January 2021 and has successively delayed the full implementation of border controls amid fears of disruption at ports and a rise in the cost of living.

Instead, Brussels immediately introduced border controls for goods coming from the United Kingdom to the European Union, which led to increased costs and brought new challenges for some companies, notes Agerpres.

The British government announced in April that starting from October 31, it will request health certificates for some animal products, plants and food coming from Europe.

Additional requirements, such as physical checks and safety declarations, are to be phased in during 2024. The date of introduction of some of these requirements, such as controls on average risks of animal and plant products, is also being delayed by three months to provide respite in addition to companies.

At the end of February this year, London and the EU announced that they had reached a new agreement (the Windsor Framework Agreement) that addresses the main problems that the United Kingdom's exit from the European Union has created in the province of Northern Ireland.