I'd hold off on the wheelbarrow just yet, Penelope—unless you're planning some weekend gardening! But joking aside, it certainly is a sobering set of figures we need to keep a close eye on.
Thanks for an interesting and worrying post. Can you tell me how the cycle of borrowing works? Is it done on a month by month basis. In other words at the end of each month do they look at receipts and spending over that month and then calculate how much to borrow for that month? I'm guessing it is probably more complicated than that.
You guessed right, Steve—it is indeed more complicated! The government actually doesn't wait until the end of the month to see what they’re short. Instead, it's all planned annually. The Treasury takes the Office for Budget Responsibility (OBR) forecasts for the entire financial year to figure out their total "Net Financing Requirement." From there, the UK Debt Management Office (DMO) sets up a planned calendar of auctions throughout the year to sell government bonds (gilts) to investors. This system ensures the Treasury always has the cash flowing in to pay the bills as they arrive, rather than having to pass around the hat at month's end!
Thanks Jamie. But as you say the forecast is often low so presumably they continuously update the forecast and make adjustments as they go. I'm sure that has always happened a little but it seems the forecasts are usually very wrong which is not really a forecast, just a wild guess.
Andy Burnham and other labour MPs have said that the bond markets can basically go hang but I can't image how that would happen or what the consequences would be. If there's a gap between income and spending what's the alternative to borrowing? More tax I suppose but that would take time to implement.
Do I need to order a wheelbarrow ? It’s all very worrying
I'd hold off on the wheelbarrow just yet, Penelope—unless you're planning some weekend gardening! But joking aside, it certainly is a sobering set of figures we need to keep a close eye on.
The skint household keeps buying takeout and feeds the local rats!
Starmer’s destruction of Labour…
https://tyrellbowman.substack.com/p/the-night-britain-saw-through-starmer?r=1f4bua&utm_medium=ios
Thanks for an interesting and worrying post. Can you tell me how the cycle of borrowing works? Is it done on a month by month basis. In other words at the end of each month do they look at receipts and spending over that month and then calculate how much to borrow for that month? I'm guessing it is probably more complicated than that.
You guessed right, Steve—it is indeed more complicated! The government actually doesn't wait until the end of the month to see what they’re short. Instead, it's all planned annually. The Treasury takes the Office for Budget Responsibility (OBR) forecasts for the entire financial year to figure out their total "Net Financing Requirement." From there, the UK Debt Management Office (DMO) sets up a planned calendar of auctions throughout the year to sell government bonds (gilts) to investors. This system ensures the Treasury always has the cash flowing in to pay the bills as they arrive, rather than having to pass around the hat at month's end!
Thanks Jamie. But as you say the forecast is often low so presumably they continuously update the forecast and make adjustments as they go. I'm sure that has always happened a little but it seems the forecasts are usually very wrong which is not really a forecast, just a wild guess.
Andy Burnham and other labour MPs have said that the bond markets can basically go hang but I can't image how that would happen or what the consequences would be. If there's a gap between income and spending what's the alternative to borrowing? More tax I suppose but that would take time to implement.