First, the loss the BOE incurs is passed on to the government when bonds are sold (known as QT or quantitative tightening) or expire. Remember, most of these bonds were purchased when interest rates were very low and prices were high – essentially at market peaks.
Now when will they be sold? Prices are high and prices are low. This is a big success, especially for longer-term bonds. For example, the 2071 security was purchased at an average price of about 1.36 times its face value and is now trading at closer to 0.46 times.
In total, the sales have already cost the government almost £40 billion.
Added to this are the interest costs for the existing portfolio. The government receives coupon revenue from the holdings (approximately 2%), but must pay interest on the reserves created to finance the purchases at the current BOE rate (5.25%). Given the current portfolio size, that's more than £20 billion per year alone.
As you can see, it all adds up very quickly.
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