Economists are pressing the chancellor, John Healey, to push the Bank of England to slow or halt its bond-selling programme, which they say is adding billions of pounds to the cost of government borrowing. The Bank's monetary policy committee meets this week to set interest rates and decide whether to ease its "quantitative tightening" (QT), under which it sells back government bonds bought after the 2008 crash, at a time when gilt yields have already hit multi-decade highs amid market turmoil linked to the Middle East conflict and rising oil prices.

Selling the bonds now, at reduced value, locks in losses for the Treasury while adding to market supply and pushing up borrowing costs, with the Bank estimating in August that its stance could cost the exchequer up to £120bn. On Monday the 10-year gilt yield passed 5.4%, its highest since July 2007, while the 30-year rose to 5.93%, its highest since March 1998; reports suggest the Bank may stop selling 20- and 30-year gilts and cut its annual sales target from £70bn to £50bn. Governor Andrew Bailey has defended the policy as outside the MPC's remit to manage short-term government costs, but critics including former deputy governor Charlie Bean argue this is politically unsustainable, while Healey is understood to have resisted cabinet pressure to force the Bank's hand ahead of next month's budget.