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 Government borrowing
Topic Originator: Buspasspar  
Date:   Mon 29 Jun 18:10


The Covid virus has increased the borrowing dramatically to fund all the furlough pay, temporary hospitals, grants to Tory donor companies etc. etc.

I often wondered where does the UK borrow money from then I found a couple of interesting bits on google

So how does the UK borrow money ??

The government borrows in the financial markets, by selling bonds.
A bond is a promise to make payments to whoever holds it on certain dates. There is a large payment on the final date - in effect the repayment.

Interest is also paid to whoever owns the bond in the meantime. So it's basically an interest-paying "IOU".

The buyers of these bonds, or "gilts", are mainly financial institutions, like pension funds, investment funds, banks and insurance companies.

The appeal to the investors is that UK government bonds are seen as essentially safe - there is no risk that the money won't be paid. You won't lose your money and you know precisely when and how much the payments will be.

Now the interesting bit :-

A quarter of UK government debt is owed to the UK government itself

Private savers also buy some.
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 Re: Government borrowing
Topic Originator: Wotsit  
Date:   Mon 29 Jun 21:40

The UK has started selling negative-yield gilts this year.

So investors effectively pay to lend the government money, and people are lapping them up because they are a safe place to hoard wealth.


"Who you are and what you feel comes not just from inside you, but from where you are in the power structure"
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