Spring Statement 2022: Debt Management

Chancellor Rishi Sunak made the following announcements on Debt Management in his Spring Statement on 23 March 2022. His ‘Debt management report’ fulfils the annual requirement in accordance with the ‘Charter for Budget Responsibility'.

The report found that public sector net borrowing (PSNB) in 2021-22 is expected to be £127.8 billion, lower than forecast in October 2021. On the other hand, In 2022-23, higher debt interest payments due to inflation more than offset higher receipts and mean borrowing is higher than forecast in October 2021.

While debt is lower than forecast in October 2021, it remains historically high. Public sector net debt (PSND) increased from 82.7% of GDP in 2019-20 to 94.0% of GDP in 2020-21 and is expected to peak at 95.6% of GDP in 2021-22, the highest level since the 1960s.

The Net Financing Requirement for the Debt Management Office in 2022-23 is forecast to be £147.9 billion. This will be financed by:

• Gilt sales of £124.7 billion and net Treasury bill sales for debt management purposes of £23.2 billion.
• The UK’s stock of index-linked debt stood at around £493.2 billion at the end of 2021, making up 23.9% of the government’s debt portfolio.
• National Savings and Investments will have a net financing target of £6 billion in 2022-23, within a range of £3 billion to £9 billion.

Part of the debt is structured:

• In March 2021, the government issued its second UK sovereign Sukuk, raising £500 million. Sukuk are financial certificates, similar to bonds, but in nominal uplifted terms which comply with the principles of Islamic finance. The Sukuk took an alIjara structure and will mature in 2026 The UK has now issued a total of £700 million in sovereign Sukuk, following the first issuance of £200 million in 2014.
• The government launched the UK’s Green Financing Programme last year, with the publication of the Green Financing Framework in June 2021. Under this Programme, the government has raised £16.4 billion through the sale of green gilts, via the DMO, and retail Green Savings Bonds (GSB), via NS&I.
  • In 2022-23, the government plans to issue £10.0 billion of green gilts, subject to demand and market conditions, with the current expectation that this will be issued across both medium and long maturities
• The government also launched the world’s first sovereign retail GSB tied to the same framework as green gilts, through NS&I, in October 2021. The GSB are a three-year fixed-term savings product As of 15 March 2022, NS&It has raised £0.3 billion from the GSB since the initial October 2021 launch.

External links

Debt management report: 2022-23