World government debt

So far Burnham has committed to not borrowing more, unless that changes or there is an economic event we are not expecting. All will be revealed in the budget statement.

This from the Telegraph two hours ago.
So we shall see.

Bond markets give Burnham a painful reality check

The Telegraph
www.telegraph.co.uk › business › 2026/09/01
2 hours ago — Burnham said he will not ditch the rules, but he will seek to use “flexibility” within them. This is expected to mean more borrowing

I see no signs of a financial disaster at the moment. high interest rates are not synonymous with financial collapse.

But Burnham is showing worrying signs of being a one trick pony. His eloquence and 'charm' have got him the job, but now he has it, he doesn't know how to do it.

Government 'debt' isn't as much of a problem as private debt; it was private debt which eventually triggered the 1929 US stock market crash, which had worldwide repercussions.

Government debt is only a serious problem for countries which borrow in a foreign currency instead of their own sovereign currency because they have to service the debt in the borrowed currency and cannot afford to provide effective public services and credit.

Private debt is sky high, but lenders are flexible these days it's surprising how many borrowers are paying "interest only" on property. Short term thats not a problem, if the economy take a does take a downturn lenders are going to be hard to find.

Burnham is trying hard to create a "feel good" atmosphere in the UK, it's up to his own MPs to back him and stop asking for unrealistic changes. If he does fail to control the economy it will go downhill fast.

The traditional system with most people working and paying taxes to support the infrastructure of the welfare state will fall apart. It cannot be fixed in 10 or 20 years.

What will come next?

A transition to hybrid welfare states built on universal basic services, asset‑based taxation, automation‑linked revenue, and bounded universalism. The shift is already visible in UK policy debates and global welfare research.

The collapse of the traditional tax base is already under way due to an ageing population and falling birth rate therefore less workers. Rising health related and welfare claims further reducing labour force participation. The emergence of a side hustle culture which bypasses PAYE and NI.

Burnaham is already making the noises of moving away from council tax to land based tax and taxing wealth and capital gains.

Government debt is only a serious problem for countries which borrow in a foreign currency instead of their own sovereign currency

Assuming that is true[I have no idea. and we rarely agree on things financial!], how much do we borrow in a forsign currency?

It used to be 29%??
The government used to let details like that known. Not sure they do now.
And is 29%[if that is the figure], too high? In the current level of borrowing? And the current interest rate we are borrowing at[which is higher than all EU countries currently, as far as I know, and a little higher than the US?]

fancythat

^Government debt is only a serious problem for countries which borrow in a foreign currency instead of their own sovereign currency ^

Assuming that is true[I have no idea. and we rarely agree on things financial!], how much do we borrow in a forsign currency?

It used to be 29%??
The government used to let details like that known. Not sure they do now.
And is 29%[if that is the figure], too high? In the current level of borrowing? And the current interest rate we are borrowing at[which is higher than all EU countries currently, as far as I know, and a little higher than the US?]

The rate of interest we pay on loans reflects the confidence of the investor that the value of the loan will be constant. That depends on the value of sterling being stable, if an overseas investor lends at 5% interest and the pound devalues by 6% he has lost money. It's not just overseas investors we can all invest in foreign shares, if a better return in an overseas investment is available UK interest rates have to go up to attract investment back.

Remember the government has to borrow on a day to day basis to balance the account, it cannot wave a magic wand and conjure money day by day it has to pay the going rate.

The rate of interest we pay on loans reflects the confidence of the investor that the value of the loan will be constant

And can act as a warning that borrowing may need to be lessened?
And reflects confidence in a Country and it's leadership? Financial leadership in particular?

Remember the government has to borrow on a day to day basis to balance the account, it cannot wave a magic wand and conjure money day by day it has to pay the going rate.

But it also borrows[at lower rates] on a 10 year or 20 year basis[some of which comes up for renewal from time to time?]

^ It's not just overseas investors we can all invest in foreign shares, if a better return in an overseas investment is available UK interest rates have to go up to attract investment back^

I cant say I understood this really.

I cant say I understood this really.

That's because you (and David)don't understand the reality about how government finances work.

Tell me, do you have any Premium Bonds?

i will tell you that privately

The investment market is international, we make overseas investments

If you have a Pension, ISA or Unit Trust you have a broad range of investments, some UK, probably mostly overseas, your fund managers aim to give you a steady income by reducing the risk of any particular investment loosing money.

fancythat

i will tell you that privately

OK.

Because, if you do, you are holding part of the UK 'national debt' (aka 'borrowing')

If you do, would you like the government to repay you and take back the bonds?

There is currently some £100billion invested in premium bonds and £11.3 billion in NS&I accounts. Also part of the 'national debt'. Do you think that those savers and investors would like the government to arbitrarily return their money so as to pay off some of the national debt?

David49

The investment market is international, we make overseas investments

If you have a Pension, ISA or Unit Trust you have a broad range of investments, some UK, probably mostly overseas, your fund managers aim to give you a steady income by reducing the risk of any particular investment loosing money.

Sorry, David, what has that got to do with the 'national debt'?

MaizieD

^I cant say I understood this really.^

That's because you (and David)don't understand the reality about how government finances work.

Tell me, do you have any Premium Bonds?

So are you saying that the UK account does not have to balance day by day

The UK cannot borrow or create more without consequences, if it does interest rates will rise or exchange rate fall or both. The choices are very limited because we rely so heavily on imports.

AI Overview Around 25% to 30% of the UK national debt is owed to overseas investors and foreign entities, based on figures from the Office for National Statistics (ONS).Overview of UK DebtTotal Debt: Public sector net debt reached about £2.99 trillion by June 2026. This equals roughly 95% of the UK's Gross Domestic Product (GDP)—the total value of goods and services produced.Domestic vs. Foreign: About 75% of this debt is owed to people and groups inside the UK, such as local pension funds, insurance companies, and the Bank of England.Foreign Share: Overseas investors hold the remaining 25% to 30% by purchasing government bonds, known as gilts.Why Foreign Debt Matters for the UKPound Sterling: The UK borrows money in its own currency (British pounds). This protects the government from sudden currency shocks that hurt countries borrowing in US dollars or euros.Interest Rates: The UK currently pays stable interest rates to borrow from global markets, though total interest costs rise as overall debt grows larger.

David49

MaizieD

I cant say I understood this really.

That's because you (and David)don't understand the reality about how government finances work.

Tell me, do you have any Premium Bonds?

So are you saying that the UK account does not have to balance day by day

The UK cannot borrow or create more without consequences, if it does interest rates will rise or exchange rate fall or both. The choices are very limited because we rely so heavily on imports.

Money creation has no effect on interest rate, David. By convention the end of day balance is made by issuing bonds if there is a shortfall, but it could equally be made through the Ways and Means account (money creation) . Even the daily issue of bonds to balance doesn't affect interest rates; they are set according to the market.

As a matter of interest the BoE is lowering the price on the secondary market, and thus raising the yield, by selling of the bonds they bought for QE. Which seems to me to be particularly daft at the ,moment.

fancythat

AI Overview Around 25% to 30% of the UK national debt is owed to overseas investors and foreign entities, based on figures from the Office for National Statistics (ONS).Overview of UK DebtTotal Debt: Public sector net debt reached about £2.99 trillion by June 2026. This equals roughly 95% of the UK's Gross Domestic Product (GDP)—the total value of goods and services produced.Domestic vs. Foreign: About 75% of this debt is owed to people and groups inside the UK, such as local pension funds, insurance companies, and the Bank of England.Foreign Share: Overseas investors hold the remaining 25% to 30% by purchasing government bonds, known as gilts.Why Foreign Debt Matters for the UKPound Sterling: The UK borrows money in its own currency (British pounds). This protects the government from sudden currency shocks that hurt countries borrowing in US dollars or euros.Interest Rates: The UK currently pays stable interest rates to borrow from global markets, though total interest costs rise as overall debt grows larger.

You are not answering my question, fancythat. If you had some premium bonds, or a National Savings account, would you want the government to pay back to you all the money you have invested in them?

Straw man.

Not the point in the slightest.

The reason I didnt answer!

The ways and means account hasnt been used since 2009 it was replaced by QE. It could be revived BUT the amount borrowed would be more difficult to determine from day to day being less transparent.

fancythat

Not the point in the slightest.

The reason I didnt answer!

How isn't it 'the point''? You're talking about government 'debt'.

Presumably it worries you and you would like to see it diminish. The only way to cut it is either to 1) repay those who hold it or 2) cut government spending so that there is no need for bond issues...(there isn't really any need for 2) because government spending actually puts money into the economy but that seems to be a really hard concept for people to grasp)

Asking if you'd like any government 'debt' you hold to be repaid to you seems to me to be entirely relevant.

Britain's economy is facing 'very, very substantial challenges', Bank of England governor warns Burnham amid spiralling UK debt

Global markets have been gripped by fears over inflation and soaring debt this week, resulting in a bond market sell-off which has caused government borrowing costs to spike across the world.

Britain – which already pays the highest borrowing rates among all G7 economies – has been especially vulnerable at a time when investors are increasingly worried about how the Chancellor will make the sums add up in next month's Budget