These strains follow criticism directed at the bank for its delayed response to surging inflation and its underestimation of persistent price pressures. Although Bernanke’s review found the bank’s forecasting issues mirrored those of peers, he flagged its outdated infrastructure as requiring urgent updates.
For centuries the Bank of England has been the guardian of Britain’s financial health. Now the central bank is facing a budget crunch of its own. https://t.co/nF5kAEXgck
— Bloomberg (@business) June 17, 2025
The central bank recently shifted to a new funding structure and has not issued a dividend to the UK Treasury for the fifth consecutive year. Recruitment in a competitive labour market has also driven up salaries.
The BoE’s next annual report is expected to outline the full extent of its financial constraints. Its most recent accounts, covering the year to February 2024, showed operating costs of nearly £800 million.
A bank spokesperson told Bloomberg that it must “make decisions in a constrained environment” while carrying out a “significant, multi-year transformation of all aspects of our operations.” They added: “We are committed to making the bank a more modern, efficient and resilient institution.”
In a February meeting of the Court of Directors, which oversees the bank’s strategic and budgetary direction, officials disclosed that some essential projects were not funded, and all discretionary spending had been delayed or cancelled. Meeting minutes indicate that court members have raised concerns over investment shortfalls. In October, non-executive director Ron Kalifa questioned the adequacy of the investment budget, and in February, the court asked staff to explore ways to increase it.