UK Gilt issues to be lowered by £2.4bn to £51.1bn.
The UK government has decided to cut it’s borrowing in the current financial year by £3.9bn after data revealed it had lower-than-anticipated net cash requirements for the year before.
With increasing government receipts and restraint on public spending towards the end of 2004-5, net cash required fell by about £4bn, according to figures from the Office for National Statistics.
The Debt Management Office- which borrows on behalf of the government, yesterday made a downward adjustment to planned gilt issues by £2.4bn to £51.1bn, and reduced Treasury bill sales by £1.5bn.
But while the government might welcome the revised figures this close to an election, the lower expected supply of paper was unlikely to make a lasting impression on the bond market.
This is partly because gilt issuance of £51.1bn is still the highest in over a decade – second only to the £54.8bn in 1993-4 – and does not change the worsening outlook for public finances.
Gilt issuance has soared since 2002, and analysts estimate a cumulative increase in financing requirements.
Borrowing remains biased toward longer-term issues – including plans for gilts with up to 50 years maturity – that let the government to lock in low interest rates.
The DMO reduced issues across the maturity sector, lowering short-, medium- and long-dated conventional bonds by £1.4bn and index-linked bonds by £1bn. It also cancelled an October auction of index-linked gilts.
With increasing government receipts and restraint on public spending towards the end of 2004-5, net cash required fell by about £4bn, according to figures from the Office for National Statistics.
The Debt Management Office- which borrows on behalf of the government, yesterday made a downward adjustment to planned gilt issues by £2.4bn to £51.1bn, and reduced Treasury bill sales by £1.5bn.
But while the government might welcome the revised figures this close to an election, the lower expected supply of paper was unlikely to make a lasting impression on the bond market.
This is partly because gilt issuance of £51.1bn is still the highest in over a decade – second only to the £54.8bn in 1993-4 – and does not change the worsening outlook for public finances.
Gilt issuance has soared since 2002, and analysts estimate a cumulative increase in financing requirements.
Borrowing remains biased toward longer-term issues – including plans for gilts with up to 50 years maturity – that let the government to lock in low interest rates.
The DMO reduced issues across the maturity sector, lowering short-, medium- and long-dated conventional bonds by £1.4bn and index-linked bonds by £1bn. It also cancelled an October auction of index-linked gilts.
April 21, 2005
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