Protesters rail against latest Bank of England rate rise

Demonstrators called for no more rate hikes and a windfall tax on excess bank profits

London, 3 August 2023 – Members of the public gathered outside the Bank of England this morning to protest the Bank of England’s latest interest rate hike, which marks a 15-year high at 5.25%.

Demonstrators lamented the decision, arguing that raising interest rates are doing little to bring down inflation, which has been largely driven by supply-side factors like international fossil fuel prices and climate change disrupting food costs, but will deepen the suffering of households already struggling with the cost of living.

As well as an end to interest rate hikes, the protesters called for a windfall tax on the excess profits banks have made off the back of soaring rates. They held balloons bearing the figure of £28.93 billion, reflecting the profits of the Big Four UK banks for the first half of this year and symbolising how they’ve “ballooned” 80% since last year, when they were £16.6 billion.

Banks are not only benefitting from the higher interest payments that their customers have to pay them on loans, but also from the interest the Bank of England pays on the accounts they hold with it. Britain’s central bank is expected to pay an estimated £75bn of interest on banks’ risk-free reserve accounts over 2023 and 2024, with a total of around £150bn due to be paid out between 2022 and 2028. The Treasury ultimately foots the bill for these payments, meaning tens of billions of pounds that could be spent on public services are being handed to banks for no additional goods or services rendered in return.

Hannah Dewhirst, head of campaigns at Positive Money, said:

“We came out today to tell the Bank of England that we’ve had enough of senseless interest rate rises.

“Rate rises are failing to bring down inflation fuelled by international fossil fuel prices and food prices disrupted by climate change. They will only continue to impoverish households and enrich banks.

“What we need are better tools for dealing with inflation than blunt instruments like interest rates, and a windfall tax on bank profits to redress the harm done to workers and families by rate hikes.”

Notes:

• Photos from this morning’s demonstration outside the Bank of England can be found here: https://drive.google.com/drive/folders/13mmuDWMTUs-2yAeldGBaulJ7S2W4FrAk

• Higher interest rates mean that the Bank of England is expected to pay an estimated £75bn of interest on banks’ risk free reserves over 2023 and 2024, with a total of around £150bn due to be paid out between 2022 and 2028. For more information see: http://positivemoney.org/wp-content/uploads/Bank-windfall-tax-briefing-2.pdf

• Positive Money has called for this windfall to be taxed: https://actionnetwork.org/petitions/tell-hunt-to-tax-the-banks/

• Calls for a windfall tax on banks have been echoed by MPs, including Angela Eagle, John McDonnell, Clive Lewis, Diane Abbott and Richard Burgon

• Polling released this week found that 58% of voters say they are ‘struggling’ or ‘just about managing’ as concerns mount over squeeze on budgets: https://inews.co.uk/news/politics/majority-britons-struggling-cost-living-crisis-generation-poll-2514602

• HSBC’s Q2 profit announcement can be found here: https://www.hsbc.com/investors/results-and-announcements

• NatWest’s Q2 profit announcement can be found here: https://investors.natwestgroup.com/results-centre.aspx

• Barclays’ Q2 profit announcement can be found here: https://home.barclays/investor-relations/reports-and-events/results/barclays-h1-2023-results/

• Lloyds Bank’s Q2 profit announcement can be found here: https://www.lloydsbankinggroup.com/investors.html

For more information or to speak to a spokesperson please contact press@positivemoney.org.uk