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Lack of really long gilts shows UK’s failure to “seize the moment”

27th June 2019

With Austria set to launch a new 100 year bond, Jonathan Platt, head of fixed income at Royal London Asset Management, questions why the UK has not done this already.

No UK government or agency, in our long history of government debt finance, has been given the chance to raise long-term debt at such low rates. These opportunities do not come around often and this one is very stark. Put bluntly, if the UK government cannot earn a better return than 1.5% on its spending over the longer term it is not doing its job. Just think of the great infrastructure projects, health investment and educational advancements that could be supported – to say nothing about starting to address unfunded public sector pensions.

The Debt Management Office is an executive agency of HM Treasury. Part of its remit is the obligation to minimise financing cost (for the UK taxpayer) over the long term, taking account of risk.

 “The present timidity on raising long-term finance shows just how much we have lost the sense of “seizing the moment” to make transformational change.”

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About Royal London Asset Management

Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.

RLAM manages £114 billion of assets and employs 92 investment professionals as at end December 2018. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.

For professional clients only, not suitable for retail investors.

Issued March 2019 by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.