UK Taxpayers Pay £110 Billion to Cover Bank of England’s QE Losses
The UK Treasury has paid out £110.72 billion in taxpayer money since October 2022 to cover losses from the Bank of England’s quantitative easing (QE) program, according to a recent parliamentary disclosure. The figure was revealed in response to a question from former pensions minister Baroness Altmann, who sought details on the financial impact of the QE scheme. The Treasury is also expected to pay an additional £73 billion over the next four years to 2029-30, based on official forecasts.
Quantitative easing involved the Bank of England creating new money to purchase government bonds, starting in 2009 and expanding during the pandemic. At its peak in February 2022, the Bank held £895 billion in gilts through the Asset Purchase Facility. Initially, the scheme generated profits, with the Treasury receiving £7.2 billion in 2021-22 and £4.2 billion in 2022-23. However, rising interest rates led to losses as the Bank paid higher interest on the created money while many bonds offered lower fixed returns.
The payments to cover losses have been substantial: £5 billion in 2022-23, £44.5 billion in 2023-24, £36.3 billion in 2024-25, and £16.7 billion in 2025-26, totaling £102.5 billion over these four years. Treasury minister Lord Pitt-Watson explained that the funds covered losses from interest costs and the sale of bonds as the portfolio was unwound. The Office for Budget Responsibility (OBR) predicts further payments of £15.5 billion in 2026-27, £18.4 billion in 2027-28, £20.8 billion in 2028-29, and £18.2 billion in 2029-30.
The Bank of England plans to reduce its remaining gilt holdings by 2034, with a target of selling £20 billion annually alongside maturing bonds. Additionally, the Bank has paused bond auctions while exploring a model where the Treasury’s Debt Management Office could buy £146 billion of longer-dated gilts directly from the Bank. This would mean the government buying back its own debt from the central bank, with any losses still falling on the public purse.