News · November 11, 2026, 06:31 UTC
Chancellor of the Exchequer John Healey reduced the authorized maximum size of the Bank of England’s Asset Purchase Facility (APF) to £482.4 billion from £524.9 billion, according to letters exchanged with Governor Andrew Bailey and published on November 10, 2026. The new ceiling matches the value of the APF’s gilt holdings on November 4, 2026.
The APF is the Bank’s portfolio of UK government bonds acquired under quantitative easing and now being reduced on the instructions of the Monetary Policy Committee (MPC). The Treasury indemnifies the facility against losses under an arrangement established in 2009.
What happened
The reduction follows a mechanism agreed on February 3, 2022, under which the authorized maximum is reset every six months in line with the declining stock of assets. The previous ceiling of £524.9 billion was set in a May 5, 2026 exchange of letters.
Of the new total, £362.4 billion is authorized for monetary policy purposes and £120 billion for indirectly backing current and future banknote issuance, Healey’s letter said.
The banknote allocation contains the longest-dated APF gilts, with maturities from 2049 to 2071, which are to be held to maturity outside the monetary policy unwind.
As of November 4, 2026, the APF stood £412.5 billion below its January 2022 peak of £894.9 billion, a 46% reduction, according to the Chancellor’s letter. Financial News reported that the ceiling has fallen by £42.5 billion since May, when the portfolio was 41% below its peak.
The MPC plans to unwind gilts held for monetary policy purposes through annual sales of £20 billion in purchase-proceeds terms until the portfolio is fully unwound by the end of 2034. Taking the maturity profile into account, that equates to an average annual stock reduction of £46 billion, the letters said.
The Bank Executive has said it will not sell gilts with redemption dates earlier than 2035.
Bailey’s letter said the Bank Executive intends to conduct the remaining active sales to the government rather than the market, subject to final agreement with HM Treasury.
Under the proposed mechanics set out in a September 17, 2026 exchange, the Debt Management Office would buy APF gilts at market prices in a pre-defined, pre-announced manner and on-sell them to the National Loans Fund for cancellation, financing the purchases through its annual remit.
The Treasury assessed that this would leave overall public-sector gilt supply to the market unchanged.
Analysis: Why it matters for investors
The letter exchange records the portfolio’s contraction and resets the authorization around what remains; it does not itself announce new asset purchases, gilt sales or an indemnity transfer.
For gilt investors, the more consequential item is the pending decision on whether remaining active sales go to the government instead of the market.
If implemented, the Treasury’s assessment suggests public-sector gilt supply to private investors would be unchanged, though the plan remains conditional on a final decision.
The £362.4 billion monetary policy allocation should not be read as the amount earmarked for active sales.
A September 17, 2026 implementation notice assigned £221.7 billion to maturity and £146.5 billion of gilts maturing between 2035 and 2049 to the active unwind, both in purchase-proceeds terms and separate from note-backing assets.
Who is affected
Gilt market participants are most directly affected, given the potential shift of sales from the market to the government. The Exchequer bears gains and losses connected with the facility, including the segregated banknote-backing portfolio, under the indemnity.
The Chancellor copied the letters to the chairs of the Treasury Committee and the Public Accounts Committee and deposited them in the libraries of both Houses of Parliament.
What is still uncertain
Whether all remaining active gilt sales will be conducted to the government has not been decided; the letters describe continuing work and a progress review before April 2027. The operational details of the unwind are due to be announced by April 2027 regardless of the final sales-model decision.
The sources do not specify the timing of any implementation beyond that review window.
Conclusion: What to watch next
The ceiling is due for review again in six months alongside the relevant APF Quarterly Report. Before then, the key markers are the progress review ahead of April 2027 and the Bank’s announcement of operational details for the multi-year unwind.
Any incorporation into the Debt Management Office’s annual financing remit would depend on a final decision to proceed.
Frequently Asked Questions
What is the Bank of England's Asset Purchase Facility?
The APF is the Bank of England's portfolio of UK government bonds, bought under quantitative easing and now being reduced on the instructions of the Monetary Policy Committee. The Treasury indemnifies the facility against losses under an arrangement established in 2009.
By how much was the APF ceiling cut?
Chancellor John Healey reduced the authorized maximum to £482.4 billion from £524.9 billion in letters exchanged with Governor Andrew Bailey on November 10, 2026. The new ceiling matches the APF's gilt holdings on November 4, 2026.
How far has the APF fallen from its peak?
As of November 4, 2026, the APF was £412.5 billion below its January 2022 peak of £894.9 billion, a 46% reduction, according to the Chancellor's letter. Financial News reported the ceiling has fallen by £42.5 billion since May 2026.
What is the MPC's unwind plan for the APF?
The MPC plans annual gilt sales of £20 billion in purchase-proceeds terms until gilts held for monetary policy purposes are fully unwound by the end of 2034. Taking the maturity profile into account, that equals an average annual stock reduction of £46 billion.
Will the Bank sell remaining gilts to the government?
Governor Andrew Bailey said the Bank Executive intends to conduct the remaining active sales to the government rather than the market, subject to final agreement with HM Treasury. Officials will review progress before April 2027, and operational details are due by then regardless of the decision.
AI Notice: This article was created wholly or predominantly with the assistance of artificial intelligence and was published without human editorial review.
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