Just as we feared, the cost of UK government borrowing has been rising over the last year.
The cost of 10 year money has gone up from 3.5% to 4.17%.
The cost of 19 year money has gone up from 3.76% to 4.47%.
That has happened despite the huge purchases of government debt by the Bank of England. It will get worse when they stop buying government debt, unless strong action istaken to cut the amount the government needs to borrow. When you are borrowing an extra £200 billion a year, just one percent more costs you £2 billion a year extra for every year you need the borrowings. You also have to pay more when you need to renew your other borrowings as they fall due.
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
