5 days ago
Falling demand for bonds ‘may add £20bn' to UK borrowing costs
Declining demand from pension funds for government bonds risks adding tens of billions of pounds to the UK's borrowing costs, the Office for Budget Responsibility has warned.
The government's fiscal watchdog has said there will be at least a £20 billion hit to long-term borrowing costs over the coming decades from the falling ownership of gilts among defined benefit pension schemes.
David Miles, a member of the OBR's budget responsibility committee, told MPs the UK was facing a 'worrisome' future where 'one of the strong buyers of UK government debt over decades is declining'.
'You've got to find people and induce them to hold bonds,' he said. 'That means you've got to offer them a better deal.'
