UK Fund Managers Urge Bank of England to Halt Bond Sales Amid High Borrowing Costs

Asset managers overseeing more than $1.5 trillion in assets are urging the Bank of England (BoE) to halt its bond sales program, arguing it unnecessarily strains Britain's government debt and costs taxpayers tens of billions of pounds annually. Despite the BoE's recent decision to slow the pace of gilt runoff from £100 billion to £70 billion, these investors believe this measure is insufficient and are calling for a complete stop to sales. The UK's long-term borrowing costs have risen to the highest among G7 nations, with high inflation and fiscal concerns depressing gilt values. The BoE's active sales in weak UK debt markets have led to losses, which the Treasury compensates, currently costing the government around £22 billion annually. Critics, including Mark Dowding of RBC BlueBay Asset Management, contend that the BoE's quantitative tightening worsens the issue by driving up yields and increasing public sector borrowing costs, creating a negative fiscal feedback loop. The BoE and Treasury have declined to comment on potential policy changes to ease the strain on public finances.