The Bank of England said that its intervention in the UK government debt market recently had prevented a £50 bn fire sale of gilts that would have taken Britain to the brink of a financial crisis.
The central bank defended its action, saying that had it not launched its emergency bond-buying in the wake of chancellor Kwasi Kwarteng’s “mini” Budget, pension funds would have been forced to sell £50bn worth of long term UK government debt “in a short space of time”.
This would far exceed the average daily trading volume of £12bn. The BoE’s defence of the scheme, in which it said it would buy up to £65bn in gilts over a 13-day period, is the clearest sign yet of how close the UK came to a market meltdown following Kwarteng’s plan for £45bn in unfunded tax cuts.
