Analysts have urged the Bank of England to slow the pace of its quantitative tightening (QT) programme, arguing it has added upward pressure on government borrowing costs and weakened public finances. The calls follow a dramatic sell-off in UK sovereign debt that pushed long-term borrowing costs to their highest level this century, while the Bank raised its estimate of total taxpayer losses from unwinding QE to £125bn.
International outlier
Simon French, chief economist at Panmure Liberum, said: 'I would advocate for ending active QT. If you’re looking at why UK gilt yields moved as an outlier, part of that story – albeit by no means all of it – is that we have chosen an approach to QT which has made us an international outlier.' Henry Cook, chief UK economist at MUFG, added that there is 'a strong case for further reducing the pace of QT at the next annual decision in September, irrespective of current market conditions.'
Carsten Jung, a director at the IPPR think tank, called for a complete pause, stating: 'Actively selling government bonds is adding unnecessary pressure to the gilt market. It should stop — just as every other major central bank has.' Unlike the UK, the European Central Bank and Federal Reserve let bonds mature without replacing them and absorbed losses on their balance sheets. The Fed paused QT entirely in October.
Political considerations
Both French and Cook warned against any knee-jerk change that might suggest the Bank was bailing out the Treasury. Cook said: 'Policymakers will be wary of any perception that QT decisions are shaped by political considerations, which further strengthens the case for steady tapering rather than tinkering or abrupt changes in direction.'
On Tuesday, yields on the 30-year gilt rose 11 basis points to 5.76%, while the 10-year note surged 12 basis points amid political uncertainty and inflation fears. Higher yields increase losses on bond sales, as prices move inversely. French noted: 'The higher yields go, the more selling assets off before they mature incurs a loss which is indemnified by the Treasury. So there’s a fiscal implication to all this.'
The Bank’s Monetary Policy Committee slowed bond disposals from £100bn to £70bn per year in September 2025 but raised active sales from £13bn to £21bn. Governor Andrew Bailey has previously downplayed concerns about QT’s impact on borrowing costs, noting the Treasury benefited from the original QE programme.
