£10Bn found down the back of the sofa?

 Today Rachel has apparently had a £10Bn windwall.

Members of the Bank of England's Monetary Policy Committee (MPC) have said Threadneedle Street will shrink its balance sheet by carrying out £100bn of quantitative tightening (QT) over the next 12 months.

I'm confused. 

Let's start with the basics.  Tax income is about 33% of GDP yet the government is spending 45% of GDP.

The 12% gap is basically £288 Billion of additional borrowing each year of top of the £2.7 TRILLION debt pile.

The Bank of England sell bonds on behalf of the government to fund the government credit card.

Typical credit card interest rates for UK gilt yields are between 3.5% and 4.25%. So an additional £12Bn each year of interest payments to service the debt.  The typical cost of interest payments today is £114 Bn per year and it will rise.

So here's the confusion I have.  The Bank of England is saying it's going to contract money supply and not raise capital yet the budget deficit is not going to disappear and Labour keep saying they have a £20Bn black hole in funding. 

So what does this mean? How has £100Bn in contraction of money supply resulted in £10Bn benefit for Rachel? Gilt rates are roughly 4% yet this is a 10% gain? [POST ARTICLE COMMENT - this has since been corrected by the Bank of England to £4 Bn which tallies.  Surely Rachel can do basic maths to work this out or does she think the Stupid Public will not notice this schoolgirl error?]

Does it mean the Bank of England has issued more bonds than it needed to we the taxpayers were paying more interest than we really needed to? In which case this is a pretty big error of £100Bn that the bank of england has made. In which shouldnt Andrew Bailey be sacked for this mistake?

I interpret this as the Bank of England is going to print some money and give it to Rachel.  This is inflationary....

If the gap between taxation and spending is not closed, the national debt will balloon from £2.7 TRILLION today to £3.8 TRILLION by the end of the Labour 5 year term.

Interest payments will increase from £114Bn per  year to £176Bn per year (a new £61Bn funding black hole per year) unless Labour either manage to raise more taxes or curb excessive government spending. Neither seem very likely. 

The Office for Budget Responsibility (OBR) forecast UK national debt will surge to 274% of GDP over the next 50 years. Personally I think their estimate is on the very low side.

I can't see Labour will be able to raise taxes to close the gap. 

The only option is severe cutbacks in public spending - not very Socialist.

Expect inflation to rise.