Bank of England Governor Rebuffs Reform UK Claims on Quantitative Easing Programme

The Bank of England’s Governor, Andrew Bailey, has delivered a robust defence of the central bank’s quantitative easing (QE) policies against accusations from Reform UK that the programme represents a “systemic misuse of taxpayers’ money”.

In a detailed response to Reform UK’s deputy leader Richard Tice, Bailey emphasised that the UK’s strategic approach to long-term debt issuance during periods of low interest rates has positioned the country to benefit from reduced debt costs for an extended period compared to other nations.

The controversy centres on the Bank’s bond-selling strategy and its remuneration of commercial banks’ deposits. Reform UK’s criticism specifically targeted the substantial costs to taxpayers, estimated at approximately £150 billion in losses from bond sales, which the government covers through an indemnity agreement.

Bailey highlighted the programme’s historical success, noting that between 2013 and 2022, the Bank of England transferred £124 billion in QE-generated profits to the government. The governor emphasised that critics often overlook the potential economic devastation that might have occurred without QE intervention during major economic shocks.

The Bank’s QE programme, which reached nearly £900 billion at its peak, has begun a measured withdrawal through bond sales and natural maturation. Current plans outline an annual reduction pace of £100 billion, reflecting a careful balance between monetary policy normalisation and economic stability.

The exchange underscores the ongoing debate about the long-term implications of unprecedented monetary policy measures, with Bailey maintaining that the programme’s benefits to the UK economy, including job protection and tax revenue preservation, far outweigh its costs.