'The prospect of all this extra government borrowing has raised questions about whether there is a limit to what the government is able to borrow.' Analysis from IanKingSky 👇
Yet Japan remains the world's third-biggest economy and enjoys a standard of living and prosperity that remains the envy of most other countries. Japan's debt is unproblematic because the vast majority of it is owned by Japanese financial institutions and by the Japanese public. Just 6% of it is owned by foreigners. By contrast, just under 30% of gilts are owned by foreign investors, who the UK needs to keep onside.
They can also point out that, although the cost of UK borrowing is rising and rising sharply, the UK is still able to borrow money on the debt markets relatively easily. For example, on Tuesday, the UK sold £2.75bn in 10-year gilts with a coupon of 3.088%. There were bids from would-be buyers for 2.4 times as many gilts as were being sold - scarcely evidence of a buyer's strike.
"Should the new prime minister instruct the Treasury to transfer tens of billions of pounds to support households and businesses, and fund it by additional borrowing, the UK is not going to pass some magic threshold where financial markets lose faith in the UK's ability to repay its debts.
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