The Bank of England could stop actively selling some long-dated UK government bonds as borrowing costs remain under pressure.
Reports on 15 September suggest the Bank may halt active sales of 20- and 30-year gilts. The possible change would form part of the Bank’s next Quantitative Tightening, or QT, plan.
No final decision has been confirmed yet. The Bank is expected to set out its next QT approach alongside its monetary policy decision on 17 September.
Why Is the Bank of England Considering a Change?
The timing matters because long-term government borrowing costs have risen sharply.
The 30-year gilt yield recently climbed to around 5.95%, while the 10-year yield reached about 5.38%. A 30-year government bond auction on 8 September also priced at 5.8168%, the highest level recorded in comparable data since 1998.
Part of the pressure has come from wider global markets.
Higher oil prices and renewed tensions in the Middle East have increased fears that inflation could stay high for longer. That has reduced expectations of quick interest rate cuts and pushed bond yields higher.
At the same time, the Bank has been reducing the gilts it bought under earlier Quantitative Easing programmes.
It does this by allowing bonds to mature and by selling some bonds back into the market. However, selling more long-dated bonds when yields are already high can add extra supply and place further pressure on prices.
What Could Change Under the New QT Plan?
The Bank is widely expected to slow the pace of its annual balance sheet reduction.
The current QT target is £70 billion. Reports suggest this could fall to around £50 billion for the next 12-month period.
The Bank may also stop active sales of 20- and 30-year gilts and focus more on shorter maturities or passive bond redemptions instead.
The Bank has already reduced long-dated sales in recent months, so this would be a further step rather than a complete reversal of QT.
What Does This Mean for UK Businesses?
The possible change does not mean business loans or mortgages will suddenly become cheaper.
However, gilt yields influence wider borrowing conditions across the UK economy. They affect the pricing of long-term finance, fixed-rate borrowing, commercial property debt and corporate funding.
If the Bank removes some extra supply from the long end of the gilt market, it could reduce one source of upward pressure on long-term yields.
For businesses planning refinancing, property purchases or major investment, greater stability in borrowing markets could make financial planning easier.
Ignoring these changes could leave businesses exposed to higher refinancing costs or tighter cash flow if rates remain elevated.
Why Does This Matter for the Treasury?
There is also a public finance issue.
The Bank bought many gilts during years of Quantitative Easing when bond prices were higher. Selling them now at lower prices can crystallise losses that are covered by HM Treasury under the Asset Purchase Facility agreement.
Reports suggest ending long-dated active sales could save the government around £2.5 billion a year by the end of the decade.
That does not remove wider fiscal pressure, but it could reduce one source of cost for the Treasury.
What Should Business Owners Do Now?
Businesses should watch the Bank of England’s 17 September decision closely.
Companies with variable-rate debt, upcoming refinancing, property finance or major investment plans should review their borrowing costs and stress-test cash flow against higher rates.
At Lanop Business & Tax Advisors, we help businesses understand how changes in interest rates, borrowing conditions and tax policy can affect cash flow and investment decisions.
The key point is simple: the Bank has not confirmed a halt yet, but the next QT decision could become an important signal for UK borrowing conditions. Contact Lanop today to review how rate changes could affect your business finances.
