British government bonds or gilts are trading at just over 4 pct but for how long? The Bank of England has artificially distorted the market by buying £200bn worth as part of its quantitative easing (QE) programme. There is now a pause in the gilt buying by the UK central bank but inflation is running at 3 pct and the pound is getting a right kicking in the foreign exchange markets at around $.150.
We have annual public borrowing of £180bn, which is over 12 pct of GDP and the highest per capita level of any big economy.
**** These figures were later revised downwards in the last Darling budget but are still high.
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