{"id":645,"date":"2014-07-28T07:08:25","date_gmt":"2014-07-28T07:08:25","guid":{"rendered":"http:\/\/www.asadkarim.co.uk\/?p=645"},"modified":"2014-07-28T07:27:12","modified_gmt":"2014-07-28T07:27:12","slug":"interest-payments-on-the-uk-national-debt","status":"publish","type":"post","link":"https:\/\/www.asadkarim.co.uk\/?p=645","title":{"rendered":"Interest Payments on the UK National Debt."},"content":{"rendered":"<p>The UK Government has been spending more money than it receives from taxation. Thus it is running a budget deficit. In rough numbers, it <strong>spends each year\u00a0about \u00a3700 billion<\/strong> and its <strong>income is about \u00a3580 billion<\/strong>. Thus each year it has been having to <strong>borrow \u00a3120 billion to meet it public sector expenditure<\/strong>.<\/p>\n<p>Today, the <strong>total debt public sector<\/strong> net has now hit a record of <strong>\u00a31305 Billion<\/strong> which is \u00a31.305 trillion.<\/p>\n<p>For HM Government to borrow, it issues debt instruments know as Gilts (UK Government Bonds) that is sells to investors such as pension funds, mutual funds, unit trusts etc.<\/p>\n<p>To have accumulated a total debt pile of \u00a31305 Billion, HM Government has issued hundreds of Gilts.<br \/>\nFor example in a particular month, if HM Government needs to raise \u00a38 Billion, it would issue Gilts with varying maturities:<\/p>\n<p>\u00a32 Billion @3% Interest (Coupon) maturing in 2020.<br \/>\n\u00a31 Billion @2% Interest (Coupon) maturing in 2030.<br \/>\n\u00a32 Billion @2% Interest (Coupon) maturing in 2040.<br \/>\n\u00a31 Billion @1% Interest (Coupon) maturing in 2044.<br \/>\n\u00a32 Billion @3% Interest (Coupon) maturing in 2065.<\/p>\n<p>So it offers investors different interest rates to meet the demands of varying types in investors.<\/p>\n<p>So the total \u00a31305 Billion has been accumulated by hundreds of auctions.<\/p>\n<p>Thus it is impossible to say this \u00a31305 Billion has one interest rate, but let\u2019s assume the \u00a31305 Billion as an average interest rate of say 2%.<br \/>\nThis will then tell us the interest payments HM Government has to pay on its cumulative debt pile of \u00a31305 Billion.<\/p>\n<p>\u00a31305 Billion @ 2% = <strong>\u00a326.1 Billion a year in debt payments.<\/strong><\/p>\n<p>Yes, just on an approximate basis, HM Government needs to spend \u00a326.1 Billion a year in debt payments which clearly comes out of the \u00a3700 Billion expenditure budget. However, this \u00a326.1 Billion adds no value to the economy, it is not building schools or creating a new university, it is dead expenditure.<\/p>\n<p>The numbers are staggering. But at least we are all in it together.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The UK Government has been spending more money than it receives from taxation. Thus it is running a budget deficit. In rough numbers, it spends each year\u00a0about \u00a3700 billion and its income is about \u00a3580 billion. Thus each year it has been having to borrow \u00a3120 billion to meet it public sector expenditure. Today, the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-645","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/645","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=645"}],"version-history":[{"count":2,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/645\/revisions"}],"predecessor-version":[{"id":647,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/645\/revisions\/647"}],"wp:attachment":[{"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.asadkarim.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}