Chancellor and Bank of England Governor Agree to Cut APF Ceiling to £482.4bn as Quantitative Tightening Continues
On 10 November 2026, Chancellor of the Exchequer John Healey MP and Bank of England Governor Andrew Bailey exchanged letters formally reducing the maximum authorised size of the Asset Purchase Facility (APF) from £524.9bn to £482.4bn. The APF is the facility through which the Bank of England purchased gilts (UK government bonds) under its quantitative easing (QE) programme, and its ongoing reduction is referred to as quantitative tightening (QT). The reduction reflects the current stock of APF gilt holdings, which stood at £482.4bn as of 4 November 2026. Of that total, £362.4bn is authorised for monetary policy purposes and £120bn is authorised for the purposes of indirectly backing current and future banknote issuance. The APF has now been reduced by £412.5bn, or 46 per cent, from its peak of £894.9bn in January 2022. The process follows an approach agreed in February 2022 under which the ceiling is reduced periodically as the stock of assets falls. The Monetary Policy Committee (MPC) has decided to unwind the APF through annual gilt sales of £20bn in purchase proceeds terms, with the target of fully unwinding gilts held for monetary policy purposes by the end of 2034. As a consequence, the Bank will not sell gilts with redemption dates earlier than 2035. HM Treasury and the Bank are also developing a model under which all active APF gilt sales would be conducted directly to the government rather than to the market, with a review before April 2027 and potential implementation timed to align with the DMO's (Debt Management Office's) annual financing remit.
Why this matters
The reduction of the APF ceiling to £482.4bn is a mechanistic but significant milestone in the UK's QT programme, confirming that the pace of balance sheet reduction remains on track. The proposed shift to conducting gilt sales directly to the government rather than to the market is a structurally important development: if implemented, it would change the channel through which sovereign debt is redistributed, reducing the volume of secondary market sales and potentially affecting gilt pricing dynamics and DMO issuance strategy. With the ceiling now reviewed every six months, the trajectory points toward a 2034 endpoint for monetary-policy-purpose gilt holdings, giving the market a clear unwinding timetable.
On the Ground
Banking and finance practices advising gilt-edged market makers, institutional investors, and sovereign debt managers will be watching the proposed direct-to-government sales model closely, as it would reshape the QT execution mechanism. Structured finance and capital markets lawyers advising on instruments that reference gilt pricing or the Bank's balance sheet will also need to track this development. A trainee on a matter touching government bond markets would assist with legal opinion coordination on gilt documentation, review facility agreement schedules referencing benchmark rates, and prepare summaries of regulatory correspondence for client briefing notes.
Interview prep
Question you might get
“What are the legal and market implications of the Bank of England potentially shifting APF gilt sales directly to the government rather than to the open market?”
Sign up free to see the full answer
A model answer you can lift into an interview — how to frame this story for a partner.
Sign up freeSources
My notes
saved