Indeed, the QE program has not been as effective as it seems looking at its size. In fact, £125bn or 9% of annual GDP was spent in just five months and neither has increased significantly money supply nor improved bank credit availability. For example, although the £125bn of QE is equal to 6% of M4 and 10% of deposits held by households and non-financial businesses, the March-May 0.35% month over month gains in M4 were equal to that of January-February period. Moreover, fixed mortgage rates and interest rates on unsecured personal loans rose in June.
Looking further, while credit spreads and equities have improved significantly in U.K. since QE implementation, they got better also in other countries using measures like credit easing (U.S.) or actions to improve bank liquidity (EU). More importantly, the end of QE may make credit less available again and gilt yields are likely to rise further as markets have to deal with financing Britain’s unsustainable fiscal position.