The UK Can Cut Its Bloated Borrowing Costs. Here’s How.
Shortening maturities and buying back long-dated gilts at a discount would be a new operation twist.
Chancellor of the Exchequer Rachel Reeves.
Photographer: WPA Pool/Getty Images EuropeIt's only when Chancellor of the Exchequer Rachel Reeves sits down in Parliament on Wednesday, after delivering an emergency budget in all but name, that the action really starts in the UK gilt market.
All eyes will be on how much more borrowing is on the slate. A modest 5% increase from this year's £300 billion ($390 billion) remit is broadly expected, but the key is how much will be borrowed for how long. There's an opportunity to do something radical by shortening the maturity profile of gilt debt — which would help the parlous state of UK finances. It’s becoming increasingly apparent that there is a widening gap between spending and revenue, and this will be a major credibility test for Reeves. Time to become far more efficient in how much it costs the UK to borrow — as its needs are only going upwards.