Selling the gilts back
The Bank of England now sells gilts it bought years ago. Who has to buy them?
Mechanically correct — illustrative calibrationThe transmission channels are engine-correct; the magnitudes are teaching values, not a forecast.The verdict
Central bank pay 50p of every £1 of pressure. Pensions & insurers gain 25p.
50pof every £1 of pressure lands on Central bank
Where the pressure moves
The £1 pressure trail
Green trails = cash / relief received. Red trails = pressure absorbed. Every £1 has to land somewhere.Every £1 of pressure · rebased to 100p
How to read this — three tiers
Ledger— Real cash, deposits or reserves move between actors. Conservation-checked.
Valuation— Existing assets are marked up or down. No cash changes hands, but balance sheets move.
Indicator— A directional pressure gauge only. Not a cash movement and not a balance-sheet entry.
Who gains
- Pensions & insurers+25p
- Banks+13p
- Overseas+13p
Who pays
- Central bank−50p
What it means for one person
The Treasury
issuing new debt into a shrinking demand pool
Borrowing costs rise as one guaranteed buyer steps back. The debt-service bill grows, competing with public spending for headroom.
The context
QT is QE in reverse. The Bank shrinks its balance sheet, and pensions, banks and overseas holders absorb the gilts — paying with reserves and cash. The valuation loss lands on holders' balance sheets.
Explore further
Change a lever. See how the trail moves.
Sources
More scenarios