Question to the HM Treasury:

To ask His Majesty's Government how much quantitative tightening has cost the Treasury since it began in 2022; and what they estimate the cost will be by 2029.

The Bank of England has operational independence from the Government to carry out its statutory responsibilities for monetary policy and financial stability. Monetary policy, including quantitative easing, is the responsibility of the independent Monetary Policy Committee at the Bank of England.

In a letter to the Chancellor (12 November 2024), the Governor of the Bank of England said:

“Whilst different unwind strategies might affect the timing of cash flows between HMT and the APF, they are expected to have little effect on total cost in present value terms. For example, active sales incur upfront costs, but they also reduce lifetime net interest costs from carrying gilts on the APF’s portfolio when Bank Rate is higher than coupon payments.” [1]

Since October 2022, HM Treasury has transferred £85.9bn to the Bank of England to cover losses arising from the indemnity of the Asset Purchase Facility, the vehicle used to implement quantitative easing. This covers losses incurred from net interest costs and the sale and redemption of bonds as the portfolio is unwound.

Between 2012 and 2022, the APF transferred £124bn in excess cash to HMT under the terms of the indemnity from net interest payments on purchased assets.

Data on these cash transfers between HM Treasury and the Bank of England are made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data are available in the ONS data series ID MF7A in worksheet PSA9B.

The independent OBR provides detailed projections of the underlying losses from the APF and the impact on different fiscal metrics. As per the OBR’s Economic and Fiscal Outlook for the Spring Forecast 2025, the lifetime cost of the APF is forecast to be £133.7bn.

[1] Letter from the Governor of the Bank of England to the Chancellor of the Exchequer 12 November 2024