Don’t panic
I quite like this chart showing UK debt interest payments over the last 100 years, showing amongst other things that debt interest payments were higher in the mid 1990s as a percentage ogf GDP.
No need to panic then.
I also quite like this FT article about what the head of bond markets and public debt management the OECD:
The markets are creating a situation where countries could be forced to retrench too far and introduce austere fiscal policies that are not good for their economies as it risks stifling growth.
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Categories: General Politics
So, Debt interest was higher during the entire conservative government of 1979-97 than now. Why arn’t we shouting this from teh rooftops?
A point Chris Huhne used to be fond of in a previous incarnation.
Not being a great expert in bond yields I’m wondering what might happen to that if the base rate jumps in a few years time (as may or may not happen).
I’m also quite surprised about the pre-WW1 figures. I would have thought they would be much lower then currently, even though they are historically low. Any ideas why they aren’t lower?
Lethe, I would imagine the Boer war might have been responsible for the high interest payments prior to world war one.
So much for passing debt down to future generations.
Thank you. Good point. I imagined it would be a war of some sought, but the Boer escaped the memory. Pretty poor I know.
Heh, no worries. For some reason our cultural memory of the Boer war is tiny given the amount of mobilisation.
Forgot to do the hat tip in my rush before: It’s to Boffy http://boffyblog.blogspot.com/2010/10/uk-debt-facts.html
And if (when) rates rise from their current historic lows? – Don’t panic. The coupon rate on existing debt is fixed, right? So the rates paid on new debt would go up, but by then we oughtn’t to be issuing so much. TIPS yields will go up with inflation, but they’re a small part of the total I think (and ‘we’ can always manipulate how inflation is calculated anyway can’t ‘we’…)
Yeah I know the coupon is fixed for most government debt but there is the refinancing issue. Against that is the long average maturity of UK debt. I don’t think there is reason to panic – I’m just wondering how much of a negative it will be.
Hahaha–that is a quality graph!