The Bank of England (BoE) has defended its intervention in the UK government debt market, saying it stepped in to avoid a £50bn fire sale of gilts that would have taken the UK to the brink of a financial crisis.

In a letter to the chair of parliament’s Treasury committee, Sir Jon Cunliffe (the BoE’s deputy governor for financial stability) said the bank had feared there would have been a “self-reinforcing spiral” that threatened “severe disruption of core funding markets and consequent widespread financial instability”, had the BoE not stepped in.

The letter also shed light on warnings received by the BoE ahead of its intervention. Managers of the liability-driven investment strategies at the centre of a crisis in Britain’s pension fund industry had warned as early as September 23rd that the huge moves in gilt yields would force them to dump large quantities of government debt.

Interest rates - more than 40% of all mortgage products were pulled after chancellor Kwasi Kwarteng's 'mini-Budget announcement and the interest rate on a typical two-year fixed-rate mortgage has now breached 6% for the first time in 14 years.