Bank of England Ends Long-Term Gilt Sales Amid Rising Borrowing Costs

The Bank of England is preparing to stop selling long-term government securities, known as gilts, due to rising borrowing costs. This decision comes after the central bank accumulated a significant amount of these bonds during its quantitative easing program in response to the financial crisis and Covid-19 lockdowns.

Economists estimate that offloading this long-term debt has cost taxpayers £22 billion since 2022. The Bank is now selling these bonds back to the market at significantly reduced prices, resulting in a loss for taxpayers.

Average discounts of around 50% have been observed during quantitative tightening, with Deutsche Bank analysts estimating that this strategy will lead to losses of approximately £100 billion for taxpayers over the next five years. However, halting sales of longer-dated bonds could yield estimated savings of £2.5 billion annually by the decade's end.