Helped by a faster-than-expected economic recovery and borrowing that has undershot forecasts, Britain’s government will slash its planned bond sales. This is for the current financial year. The median forecast from 12 primary dealers showed the Debt Management Office will plan to sell 218.8 billion pounds of gilts. There is also a 33.8 billion-pound reduction from its existing remit.
Primary dealers are known in Britain as gilt-edged market makers. These are banks hired by the government for helping to create a liquid market for its debt. The government has already sold 153.1 billion pounds of bonds. It sold a record 485.8 billion pounds of gilts. This is for funding the economic response to the pandemic. The rebound in the world’s fifth-biggest economy means borrowing this financial year is likely to be around 40 billion pounds. After hitting its highest since World War Two, at 15% of gross domestic product, the budget deficit looks to come in far lower than original.
The poll showed that the government borrowing for 2021/22 looks set to come in at around 190 billion pounds. This is far less than the 233.9 billion pounds forecast in March, which is done by the Office for Budget Responsibility.
