The Bank of England plans to change how it unwinds quantitative easing by selling government bonds directly to the Treasury rather than private investors. The proposal aims to reduce disruption in fragile bond markets and give the Treasury more flexibility over the timing and type of gilts issued, potentially lowering borrowing costs.

The Bank’s gilt holdings have fallen from £895bn in 2022 to £488bn, after reducing them by £70bn this year. Subject to a final decision in April, it would sell about £20bn annually and transfer £146bn in total by 2034, while retaining roughly £120bn of long-dated bonds to support banknote issuance; quantitative tightening is paused meanwhile.