Bank of England Governor Andrew Bailey has firmly rejected accusations from Reform UK that the central bank’s bond-buying and selling policies amount to a “systemic misuse of taxpayers’ money.” In a pointed response to Reform UK’s deputy leader Richard Tice, Bailey defended the long-term economic benefits of quantitative easing (QE), pushing back against claims that the strategy is burdening taxpayers with unnecessary costs.
In a letter published Monday, Bailey argued that the UK will continue to reap the rewards of lower debt costs due to strategic decisions made during the QE period. He emphasized that the government issued a significant portion of its debt when interest rates were historically low, locking in long-term savings.
“The UK will keep the benefit of lower debt costs for considerably longer than other countries,” Bailey wrote, noting that QE had effectively flattened the yield curve, allowing the Treasury to issue long-term debt at favorable rates.
Tice had sharply criticized the Bank’s ongoing bond sales and its policy of paying interest on commercial bank reserves—rates that now sit at 4.25%. He claimed these decisions would cost taxpayers tens of billions of pounds, pointing to projected £150 billion losses on bond sales.
Bailey acknowledged these projected losses but countered that the QE programme had already returned £124 billion in profits to the Treasury between 2013 and 2022. He stressed that Tice’s argument ignored the catastrophic alternatives the UK economy could have faced without QE.
“It is easy to forget the severe problems we faced,” Bailey wrote. “Most estimates indicate that QE provided very significant support to the UK economy, protecting both jobs and tax revenues.”
The QE strategy, launched after the 2008 financial crisis and expanded during the COVID-19 pandemic, saw the Bank of England purchase nearly £900 billion in government and corporate bonds. The policy was designed to drive down bond yields and stimulate economic activity through lower borrowing costs.
Now, the central bank is unwinding that position—selling off assets or allowing them to mature at a pace of £100 billion per year. While the financial costs of this “quantitative tightening” are visible, Bailey maintains that the broader economic picture justifies the approach.
With Reform UK pushing fiscal scrutiny into the spotlight ahead of potential elections, the clash between Bailey and Tice underscores growing political pressure on the Bank of England. But for now, Bailey stands by QE—not as a mistake, but as a necessary act of economic preservation.
