London Daily

Focus on the big picture.
Sunday, May 11, 2025

Bank of England to stop government bond-buying scheme today

Bank of England to stop government bond-buying scheme today

Pressure on gilts - UK government bonds - eased on Thursday as the Bank of England sought to steady market sentiment by increasing its bond-buying activity.

The Bank of England is set to stop its government bond-buying scheme today after attempting to reassure the UK's financial markets.

The Bank launched the unprecedented intervention after the chancellor's mini-budget caused chaos within the markets, as well as a potential pension pots crisis.

It promised to buy up to £65bn in government bonds - which are known as gilts - from those who wanted to sell them.

The government issues bonds to raise money for public spending, often used to service pension funds and the life insurance market.

Banks and big financial institutions that buy the gilts from the government at auction can sell them on to smaller financial institutions, traders or investors on the open market.

The price - or rate - at which they are bought and sold will be higher if investors think the government is able to repay the debt when the bond matures.

But when confidence in the UK economy falls, so does the bond price.

This increases the yield, the rate of interest or cost of borrowing, as investors seek to protect their money.

How much did the BoE spend on bonds?


The scheme launched by the Bank of England was designed to restore confidence in the government's finances - increasing bond prices and decreasing the yields it has to pay on them.

Initially, the Bank's intervention seemed to push down yields on these gilts.

But on Wednesday, yields had surged as high as 5.1%, the same level they reached before the Bank's initial intervention.

As part of the programme, the Bank bought around £4.35bn of bonds on Wednesday and £4.7bn on Thursday in an increased effort to help soothe the markets.

It brings the total bond buying to £17.8bn.

Ultimately, it has helped to prop up pension funds at a time when they were already under a lot of strain from global financial pressures.

Another U-turn expected


Chancellor Kwasi Kwarteng and Prime Minister Liz Truss are now under pressure to reinstate a planned increase in corporation tax from April.

On Thursday night, the chancellor announced he would be returning to the UK from the US earlier than planned, amid growing expectation of a government U-turn on corporation tax.

The widely anticipated move appeared to reassure the finance industry, after Bank of England Governor Andrew Bailey spooked the markets by insisting that the emergency support would not be extended.

Mr Kwarteng has also that there would be "no real cuts to public spending", appearing to double down on comments made in the House of Commons by the PM on Wednesday.

The government's plans revolve around securing an increase in economic growth - with a target of an annual rise of around 2.5% in gross domestic product.

The crucial date will be 31 October, when the forecasts presented by the Office for Budget Responsibility alongside the chancellor's statement will give an assessment on whether such a plan is realistic.

Newsletter

Related Articles

0:00
0:00
Close
Trump's Upcoming Visit to Gulf Nations: Investment and Security at the Forefront
Rodrigo Duterte Awaits Trial at The Hague. Next week he might be elected mayor of his hometown
Trump fires director of U.S. Copyright Office, sources say
Retired British police officer arrested over ‘thought crime’ tweet
Cardinal Robert Prevost Elected as Pope Leo XIV, Marking a Historic Papacy
Newark Mayor Ras Baraka Arrested at ICE Facility Amid Congressional Visit
India-Pakistan conflict may be first test for Chinese military tech
Bill Gates Announces Plan to Wind Down Philanthropic Foundation and Disperse Wealth
Historic Papal Conclave Set to Commence in Rome
Huge Copper, Gold, and Silver Discovery in Argentina and Chile — But the Profits Go Abroad
Prince Harry is pleading for reconciliation — but the royals are just as sick of his victimhood as everyone else
The Road to Freedom: She Protested Putin, Escaped House Arrest, and Survived a 2,800-Kilometer Journey
OpenAI's Flip-Flop: No Longer Going Commercial, Back to Nonprofit, After Musk Lawsuit and Backlash
“Trump Supporter” Aims to Bring a MAGA-Style Shift to Romania
First From China: Zhao Xintong Wins the Snooker World Championship
Nvidia Faces Billion-Dollar Losses – Warns: China Is on Its Way to Becoming an AI Superpower
Trump Rules Out Third Term, Names JD Vance and Marco Rubio as Potential Successors
Mexico Says ‘No’ to U.S. Troops: President Sheinbaum Rejects Trump’s Offer to Fight Cartels
Nigel Farage’s Reform UK Storms the Map, Wrecking the Two-Party Monopoly
DOGE: Reimagining Government Operations with AI
Common Sense Returns to Britain's Legal System: UK Supreme Court Declares a Woman Is… a Woman
Beijing Says U.S. Is ‘Reaching Out’ for Tariff Talks Amid Soaring Trade Tensions
U.K. Court Rejects Prince Harry’s Final Appeal Over Police Security
Prince Harry’s Heartfelt Outburst Rocks the Royal Family
Trump Shares AI-Generated Image of Himself as… Pope, Prompting Outrage Reaction
Transgender Swimmer Secures Five Gold Medals at U.S. Masters Championship
Prince Harry: “I Want Reconciliation with My Family”
Germany's Alternative für Deutschland (AfD) party has now been officially labeled “right-wing extremist” by the federal office for the so-called “protection of the constitution.”
Amazon Launches Satellite Internet Service Amidst Competition with SpaceX
Transformative Changes in Women's Wrestling: The Rise of WWE Superstars
The Rush to the White Gold: Global Investment Surge in Natural Hydrogen Exploration
This is a day in Spain without electricity and internet
Reform UK Surprises in British Elections, Challenging Traditional Two-Party System
180-Year-Old Christian University in South Carolina Announces Closure Due to Unmet $6 Million Fundraising Goal
Brazilian Woman Jailed for Fourteen Years for Writing “You Lost, Idiot” on Statue During Protest
Trump Administration Removes National Security Adviser Mike Waltz Amid Signal Chat Controversy
Dutch Politician Eva Vlaardingerbroek Receives Spyware Threat Alert from Apple
Paramount Board Considers Settlement in Trump’s $20 Billion Lawsuit Over "60 Minutes" Interview
U.S. Economy Shrink in Trump’s First Quarter as Tariff Policy Raises Questions
Deadline Looms for RTS Meter Replacement: Hundreds of Thousands at Risk of Heating Disruption
Sweden Grapples with Deadly Gun Violence: Suspect Arrested After Three Young Men Killed in Uppsala Hair Salon
Walz Reveals Why Harris Chose Him as Her Running Mate and Reflects on Democratic Losses
Spain Restores Power After Unprecedented Nationwide Blackout
Carney Secures Liberal Mandate in Canada’s Federal Election
Death Penalty Sought as Luigi Manion Pleads Not Guilty in CEO Murder Case
President Trump contacts Jeff Bezos after reports of Amazon considering listing tariff surcharges; company clarifies no such plan for main platform
Spain and Portugal Recover from Massive Blackout
Liverpool Clinches Record-Equalling 20th English League Title Under Arne Slot
Singapore Politicians Warn Against Foreign Interference in Election
Driver Ploughs into Vancouver Festival Crowd, Killing Nine
×