The Guardian revealed this at 7.20 this morning:

Newsflash: UK authorities borrowing has hit its highest degree for the reason that Covid-19 pandemic within the first half of this tax 12 months, consuming into chancellor Rachel Reeves’s headroom.

The Workplace for Nationwide Statistics has reported that the federal government has borrowed £99.8bn thus far this finanical 12 months – which is £11.5bn greater than in April-September 2024.

That is the second-highest April to September borrowing since month-to-month data started in 1993, after that of 2020.

The issue for Reeves is that that is £7.2bn greater than the £92.6bn forecast by the Workplace for Finances Duty again in March. That shortfall creates stress on the chancellor to boost taxes or minimize spending to maintain inside her fiscal guidelines (to have debt falling in 5 years time).

Notice the breathlessness, the air of panic and the sense of impending doom. I noticed one e mail in my inbox this morning responding to this information, claiming that the UK authorities was about to be “repossessed” because of its supposed borrowing. And all of that is nonsense, after all.

There are three issues to think about. For background, take a look at my new glossary entry on bonds, and my suggestion in a video this morning that the very last thing we’d like proper now could be a tax rise on anybody however the rich.

Then respect, firstly, that if the federal government “borrowed” a close to report quantity, it did no such factor. Monetary establishments positioned a close to report quantity on deposit with the federal government, lapping up all of the bonds it needed to provide within the course of. There is no such thing as a borrowing disaster within the UK. There may be simply a whole lot of saving happening as persons are not spending, a reality which is confirmed by ONS knowledge exhibiting that the financial savings ratio is rising as persons are anxious concerning the future.

Secondly, there may be extra saving as a result of the federal government is just not taxing again all it spends, and for it to take action would make no sense, except all the extra tax was to come back from the rich, as I’ve argued this morning.

Thirdly, the true curiosity price on bonds at current is about 1% over inflation. I would love inflation, and rates of interest, to fall, however let’s be clear that which means the price of bonds being issued is completely manageable when, given their probably period, a substantial a part of the price of their so-called redemption on maturity (when they are going to virtually definitely in follow be rolled over into new bonds) can have been eroded by inflation, with minimal actual funding price when inflation is allowed for within the meantime.

So, what’s the panic all about? There is no such thing as a cause for any type of panic in any respect.

However let’s additionally tackle the declare of those that recommend the UK authorities is about to be “repossessed”. That is simply crass stupidity. Bonds are owned by banks that want them, pension funds and life assurance corporations, whose enterprise fashions rely on them, and overseas governments and banks that need to maintain sterling, and that is the one secure approach for them to take action. None of them has the slightest incentive to underline the capability of the UK authorities to challenge or honour its debt, as all of them need to personal it.

Such speak is, then, utter drivel, unworthy of being revealed by anybody. However do count on it to reach someplace within the commentary at the moment. Idiots are inclined to repeat nonsense, and a whole lot of nonsense goes to be mentioned about birds at the moment.