March 14, 2013
Policymakers had previously insisted they expected to make money on the £375bn of gilts bought through QE. But, in a study published on Thursday, the Bank conceded there were scenarios under which the Government would have to bear a loss by the end of the decade.
The Bank stressed that QE was more likely deliver a £17bn profit by the time it is entirely unwound, and that the “narrow” measure of the programme’s profitability ignored the wider benefits to the public finances of lower government borrowing costs and larger tax revenues as a result of stronger economic growth.
However, the risk of taxpayer losses will fuel scepticism about QE, which senior Bank policymakers – including the Governor – have warned may no longer be so effective at stimulating growth.