Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.
In August 2014, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.
There were “only” 4 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office (http://www.dmo.gov.uk/) to raise cash for HM Treasury :-
27-Aug-2014 05/8% Index-linked Treasury Gilt 2040 £968.165 million
21-Aug-2014 2¾% Treasury Gilt 2024 £3,568.100 million
12-Aug-2014 4¾% Treasury Gilt 2030 £2,429.980 million
06-Aug-2014 0 1/8% Index-linked Treasury Gilt 2019 £1,539.592 million
When you add the cash raised:-
∑(£968.165 million +£3,568.100 million +£2,429.980 million +£1,539.592 million) = £8,505.84 million
£8,505.84 million = £8.5 Billion
On another way of looking at it, is in the 31 days in August, HM Government borrowed:-
£274 million each day for the 31 days. We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2040, 2024 2030 and 2019. All long term borrowings, we are mortgaging our futures, but at least “we are in it together…”