Gransnet forums


Billions of pounds

(132 Posts)
tanith Wed 08-Apr-20 18:52:28

I know our Government borrow money but listening to Rishi Sunak today it’s clear they are going to be supporting the country with Billions of pounds for a long time.

I feel very naive/stupid wondering where it’s all going to come from?
Can anyone enlighten me as to where all this money will be found/borrowed from?

tanith Wed 08-Apr-20 19:01:07

Sorry meant to add
Or has it all been sitting in the coffers not being used?

annsixty Wed 08-Apr-20 21:54:24

I have assumed the World Bank or Monetary Fund but. could be wrong.
All I know is that it will have to be repaid so that when our taxes go up plus NI for the working population we must grin and bear it.
Everyone ,well most, have been shored up and treated relatively fairly, like any personal debt we will have to repay it.
It may take a long time.

notanan2 Wed 08-Apr-20 21:59:34

I dont get why they arent selling / promoting a CV version of warbonds.

Situations like this is what ns&i is supposed to be for!

Why arent they making a new appealing bond product and asking people with isas/saving to transfer it over to help the gov reduce its CV borrowing

Granny23 Wed 08-Apr-20 22:07:50

Good idea notanan especially as interest/dividends on our investments have reached rock bottom anyway.

notanan2 Wed 08-Apr-20 22:12:23

I just cannot understand why it hasnt happened already this is exactly what that whole ns&i system is there for!

Jane10 Wed 08-Apr-20 22:18:01

There's bound to be a reckoning after all this has passed. Billions have been borrowed. However, things would be infinitely worse if so many of us had lost our jobs overnight and businesses closed down altogether. This govt support has kept most people afloat at least. There will have to be tax rises ahead but I for one would gladly pay more.

MaizieD Wed 08-Apr-20 23:57:21

It's not borrowed from anyone. The UK has a 'sovereign currency', it can issue as much of it as it wants. Part of it may be raised by the sale of government bonds. These are basically a savings vehicle; low interest but very safe because your guaranteed to get your interest and your principle at term. The rest is just pure money creation. We cannot run out of money. We haven't been able to 'run out of money' since the abolition of the gold standard (i.e currency was backed by amount of gold we held) in the early 70s. It's just adjusting figures on a computer now.

All that stuff about paying it back is a con. Don't fall for it.

MaizieD Wed 08-Apr-20 23:59:28

Where do you all think this money is being 'borrowed' from, FGS?

newnanny Thu 09-Apr-20 00:12:09

I don't know where it comes from but thought it must be borrowed from somewhere. The government has been very fair to both the employed and the self employed. 80% of wage up to £2500 seems very generous. They need to keep supporting the workers so they still have a job to go back to and help economy rebound when it is all over. On the news they said it will cost between 30 and 40 billion for 3 months. Sunak has already said in future self employed will have to pay class 1 insurance as they have been bailed out too. I am sure we will all be paying more tax. After out of EU they might put up VAT.

Eloethan Thu 09-Apr-20 00:50:47

I agree with Maizie but nevertheless I feel sure "pay back" will be demanded and it won't be pretty for anybody, except of course the mega rich who always seem to get out of paying their fair share of anything.

NotSpaghetti Thu 09-Apr-20 01:19:30

Sadly I think the “generous” help is much more patchy than it appears. The banks, for a start, are not lending as people expected they would, payments are slow and those businesses (such as hospitality) who may take a long time to recover are (unsurprisingly) reluctant to take on more debt.

Small directors who pay themselves mainly in dividends are also not getting help, businesses who have only just become profitable or who haven’t been trading long enough are also outside the government loan schemes.

I don’t know what was decided about zero hours contracts but certainly initially they were also outwith the schemes and plenty of people have already been laid off.

In my own family one person had to take their annual holiday to stay off work for two weeks because another person in the same house had a cough. This isn’t adding to the “debt” but does demonstrate that the policies are a bit of a mixed bag.

NotSpaghetti Thu 09-Apr-20 01:21:02

Maybe we’ll have to have shorter weeks to spread the jobs around?
I think we will have a very long period of high unemployment unfortunately.

growstuff Thu 09-Apr-20 01:34:35

Maizie is right and so are you Eloethan. The Treasury has no such thing as "coffers". It doesn't actually have any money and can issue as much money as it likes by clicking a few buttons - it doesn't even have to print it.

I don't know what Sunak's plans are, but it's almost certain money will be raised in bonds. Government debt is another person's income and there are plenty of people with money to lend. There will almost certainly be raised taxes and inflation too.

The crux is where those taxes fall. I don't think people will forget the pre-pandemic spending promises. The Conservatives will want to hang on to their "new" voters. I don't think they'll dare (at least I hope not) demonise the unemployed for a while because there are going to be a few million of them for a while - including many people who have never been unemployed in their lives. There are also going to be people struggling to pay mortgages, credit card and utility bills and people whose small businesses have gone bust - many of them aren't the "usual" benefit scrounger candidates.

I hope Anneliese Dodds is intelligent enough to hold the government to account (I think she is) and will be aware, if the government doesn't distribute the "pain" evenly.

The country's infrastructure hasn't been destroyed (as it would have been in a war). Wealth hasn't just disappeared into thin air. What's disappeared (temporarily) is internal trading, which is responsible for much of GDP and won't need a miracle worker to restore. Once people start trading with each other again, they will pay taxes.

growstuff Thu 09-Apr-20 01:37:03

No we won't NotSpaghetti. In most cases, the need for the jobs will still be there. It's true that many businesses will go bankrupt, but if the demand is there and capital is available, somebody will step in to satisfy the demand and provide jobs. It is true that many people are going to need financial support, but it won't be permanent.

tanith Thu 09-Apr-20 07:18:40

So it seems we just issue as much as is needed in my very simplistic head, thanks for the input.

Txquiltz Thu 09-Apr-20 07:23:52

notanan2 had a great suggestion. We could all be part of the solutions ahead.

Pikachu Thu 09-Apr-20 08:09:36

Government debt is primarily sold to banks, pension funds, private investors and overseas investors. These financial institutions and individuals effectively lend the government money in return for gaining a safe investment (bond) with a guaranteed interest payment. Approx 27% is ‘lent’ by overseas investors.

Investors do not see themselves as ‘lending’ money to the government. From their perspective, government bonds provide a relative safe, secure, low-risk investment option. In an investment portfolio, government debt secures the low-risk, low yield aspect.

rowanflower0 Thu 09-Apr-20 09:59:13

The country is heading onto a deep recession, with high taxes which will drain all our pockets, I'm afraid, pensioners included.

Harris27 Thu 09-Apr-20 10:03:29

Does the government have a pot where there unclaimed states where people have died and the treasury gets this? Surely that pot would help in this situation after all they screwed it by chance and by this chance we need it!

gillybob Thu 09-Apr-20 10:05:13

They just create/print more money . Easy peasy, except when this is all over the £1 in your pocket will be worth far less than it was .

Yes the announcements to pay 80% of wages is brilliant and will temporarily save the jobs of my 3 lads but they haven’t even opened the claim portals yet and I am still having to pay it all out and just getting personally deeper and deeper in debt.
I don’t know how much longer I can carry on and wonder if I am doing the right thing. There must be a lot more than me in this situation .

lovingpeace Thu 09-Apr-20 10:05:44

All of the comments appear to be thinking that all will return to 'normal' i.e as it was before but will it? Does it have to be? Couldn't we look for other ways of organising our society? For example if we considered a kind of co-operative/green set up we could help to sort out the climate problems.

Nannan2 Thu 09-Apr-20 10:06:15

I think theyre just printing more money?

Coco51 Thu 09-Apr-20 10:06:56

At one time the currency used to be backed by gold, so £1.00 meant the gold value equivalent was promised to the bearer of the note. That doesn’t happen any more. When money is sent somewhere it is a paper transaction i.e no physical money changes hands. So ’money’ is only data and representative notes or coin. The Bank of England can print as many notes as they deem fit under the term ’quantative easing’

Nannan2 Thu 09-Apr-20 10:07:14

They should really make china pay up???