By David Milliken<\/p>\n
LONDON, Feb 27 (Reuters) – Britain is on track to issue the lowest amount of long-dated government debt in two decades in the next financial year as it scales back overall sales for the first time since 2022\/23, according \u200cto a Reuters poll of bond dealers.<\/p>\n
The UK Debt Management Office will publish its plans for the 2026\/27 financial year on Tuesday \u200cand dealers’ median forecast is for total gilt sales to fall to 245 billion pounds ($332 billion), still far above borrowing levels before the COVID pandemic but down from 304 \u200bbillion pounds in the year just ending.<\/p>\n
Like in 2025\/26, sales of gilts with a maturity of over 15 years are expected to continue to account for less than 10% of issuance, down from more than 30% five years ago. Such debt has become relatively more expensive as a source of financing in recent years.<\/p>\n
This would reduce the median amount forecast to be sold to around 22 billion pounds, the lowest since 2005\/06, barring any changes later in \u200cthe financial year.<\/p>\n
“We expect the DMO to continue \u2060to skew issuance towards shorter tenors,” Morgan Stanley strategist Fabio Bassanin wrote to clients, predicting 252 billion pounds of issuance.<\/p>\n
“A gilt remit aligned with our forecasts should be a positive catalyst for gilts,” he added.<\/p>\n
Overall, dealers polled by \u2060Reuters on average expected 40% of issuance to be made up of conventional gilts with a maturity of under 7 years, 30% to be medium-dated, 9% long-dated, 10% inflation-linked and the remainder to be allocated later.<\/p>\n
Britain still has the longest average maturity of government debt across major economies, a legacy of historic demand \u200bfor \u200bthese bonds from domestic pension funds that has now largely disappeared.<\/p>\n
Since 2022, however, the \u200bcost of new long-dated borrowing has surged as inflation, \u200cofficial interest rates and perceived fiscal risks mounted and last September 30-year gilt yields touched an 18-year high of 5.75%.<\/p>\n
The government is undertaking a review that will consider increasing the amount of finance raised by issuing short-dated Treasury bills, but for 2026\/27 dealers expect net issuance to remain close to 2025\/26 levels at 11.5 billion pounds.<\/p>\n
GOVERNMENT HOPES FOR LESS BUDGET DRAMA<\/p>\n
Finance minister Rachel Reeves will present updated growth and borrowing forecasts on Tuesday, though she has said she intends it to be a much lower-key event than her annual budget in November or past mid-year updates.<\/p>\n
The banks polled \u200cby Reuters, all primary dealers in British government debt, gave a median forecast \u200bthat Reeves’ margin for error against her main fiscal target will rise to 24 billion \u200bpounds from 21.7 billion at November’s budget although Britain’s budget \u200bwatchdog will not publish a formal assessment next week.<\/p>\n
James Moberly, UK economist at Goldman Sachs, said it was possible \u200cthat Reeves could use the expected extra headroom to ease \u200brepayment terms for student loans.<\/p>\n
“We would also \u200bnot entirely exclude the possibility of further action on the cost-of-living if pre-measures headroom increases more materially,” he added.<\/p>\n
Reeves’ main budget target is based on her pledge that by 2029\/30, the government will no longer borrow to fund day-to-day spending – something Britain has achieved \u200bonly once since 2002.<\/p>\n
Public sector net borrowing for \u200c2025\/26 is forecast to come in at 131 billion pounds, slightly lower than the Office for Budget Responsibility forecast in November, \u200bpartly helped by stronger-than-expected tax receipts in January.<\/p>\n
Banks do not expect the OBR to change its 2026\/27 forecast of a \u200b112 billion-pound deficit.<\/p>\n
($1 = 0.7403 pounds)<\/p>\n
(Reporting by David Milliken; Editing by Toby Chopra)<\/p>\n","protected":false},"excerpt":{"rendered":"By David Milliken LONDON, Feb 27 (Reuters) – Britain is on track to issue the lowest amount of…\n","protected":false},"author":2,"featured_media":791965,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3,4],"tags":[230263,748,393,31968,4884,1144,18005,712,16,230262,15,1764],"class_list":["post-791964","post","type-post","status-publish","format-standard","has-post-thumbnail","category-uk","category-united-kingdom","tag-bond-dealers","tag-britain","tag-england","tag-government-debt","tag-great-britain","tag-northern-ireland","tag-reuters-poll","tag-scotland","tag-uk","tag-uk-debt-management-office","tag-united-kingdom","tag-wales"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116141213953194192","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/791964","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=791964"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/791964\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/791965"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=791964"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=791964"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=791964"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}