The Bank of England has purchased £19.3bn of UK government bonds and concluded part of its extraordinary intervention to prevent a collapse in the pensions industry.
Just five days after the former chancellor unveiled his mini-budget on 23 September, the Bank took an unprecedented action to purchase long-dated UK government bonds, known as gilts, that are effectively government IOUs.Due to a lack of market confidence in the UK economy the interest rate on these bonds had reached highs not seen since the financial crash of 2008.
The result was government borrowing was more expensive and holding on to bonds became more expensive. As a result pension funds sold of large numbers of the bonds. In an effort to prevent a mass sell-off and a collapse in the pensions market, the Bank announced it was intervening to buy up 20 and 30 year gilts to steady the market.
That intervention was only to last 13 days, the Bank said. A total of £65bn could have been spent - £5bn a day.
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