Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Cost of national debt hits 20-year high

by October 4, 2023
October 4, 2023
Cost of national debt hits 20-year high

The interest the government pays on national debt has reached a 20-year high as the rate on 30-year bonds reaches 5.05%.

A rise in the cost of borrowing comes at a difficult time for the chancellor, Jeremy Hunt, as he prepares for the autumn statement on 22 November.

Mr Hunt has already made clear that tax cuts will not be announced in November.

The higher cost of servicing the country’s debt pile could influence the decisions he makes on spending.

The total amount the UK government owes is called the national debt and it is currently about £2.59 trillion.

The government borrows money by selling financial products called bonds. A bond is a promise to pay money in the future. Most require the borrower to make regular interest payments over the bond’s lifetime.

UK government bonds – known as “gilts” – are normally considered very safe, with little risk the money will not be repaid.

Gilts are mainly bought by financial institutions in the UK and abroad, such as pension funds, investment funds, banks and insurance companies.

The Bank of England has also bought hundreds of billions of pounds’ worth of government bonds in the past to support the economy, through a process called “quantitative easing”

A higher rate of interest on government debt will mean the chancellor will have to set aside more cash, to the tune of £23 billion to meet interest payments to the owners of bonds.

This means the government may choose to spend less money on public services like healthcare and schools at a time when workers in key industries are demanding pay rises to match the cost of living.

The current level of debt is more than double what was seen from the 1980s through to the financial crisis of 2008.

The combination of the financial crash in 2007/8 and the Covid pandemic pushed the UK’s debt up from those historic lows to where it stands now.

But in relation to the size of the economy, today’s debt is still low compared with much of the last century,

The US, German and Italian borrowing costs also hit their highest levels for more than a decade as markets adjusted to the prospect of a long period of high interest rates and the need for governments around the world to borrow.

It follows an indication from global central banks, including the US’s Federal Reserve and the Bank of England, that interest rates will stay “higher for longer” to continue their jobs of bringing down inflation.

During the last financial year, the government spent £111bn on debt interest – more than it spent on education.

Some economists fear the government is borrowing too much, at too great a cost.

Others argue extra borrowing helps the economy grow faster – generating more tax revenue in the long run.

The government’s official economic forecaster, the Office for Budget Responsibility (OBR), has warned that public debt could soar as the population ages and tax income falls.

In an ageing population, the proportion of people of working age drops, meaning the government takes less in tax while paying out more in pensions.

Read more:
Cost of national debt hits 20-year high

0
FacebookTwitterGoogle +Pinterest
previous post
Unloc and Verizon Launch the Young Entrepreneurs Challenge 2023 In Europe
next post
Rail passengers in England face another day without trains

You may also like

Car Industry Urges UK Government Action to Boost...

May 8, 2024

Reeves plans closer ties between National Wealth Fund...

January 24, 2025

Half of UK firms given loans by British...

November 14, 2022

Influencer Overload? How to Navigate the World of...

November 26, 2024

Zero-hours contract crackdown: staff could be offered fixed...

September 20, 2024

Apple Hit with €1.8bn Fine for Violating Music...

March 5, 2024

A fifth of British importers have altered supply...

August 8, 2023

Royal Mail CEO accused of ‘incompetence or cluelessness’...

March 18, 2023

Jaguar Land Rover owner ‘seeks £500m UK subsidy...

March 2, 2023

TikTok reports five-fold surge in turnover to hit...

October 5, 2022

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Good Riddance to the Penny

      June 5, 2025
    • Oracle Fusion Testing: The UK Leader’s Playbook for Automation

      June 5, 2025
    • Blue state Republicans threaten rebellion if Senate changes key provision in Trump’s ‘big, beautiful bill’

      June 5, 2025
    • Ricketts, Fetterman team up for crackdown on China’s attempts to purchase US farmland

      June 5, 2025
    • Hamas working to ‘sabotage’ Trump-backed aid group with ‘fake news’: Israeli official

      June 5, 2025
    • Longtime Trump loyalist flips on GOP’s ‘big, beautiful bill’

      June 5, 2025

    Categories

    • Business (8,148)
    • Investing (2,009)
    • Politics (15,529)
    • Stocks (3,128)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved