Daire MacFadden

And also you should care what proportion of your debt is held by overseas investors.

So the UK over the last couple of decades or even less than that over the last decade, it's seen a growing share of its public debt held by overseas investors.

These are people who have choices which public debt they want to invest in.

And they don't need to stay invested in gilts.

You know, if gilts don't provide a good return on investment and if they don't think that the government has a credible strategy for getting, you know, keeping inflation close to target and getting fiscal expenses down, then they can shift into treasuries or boons or, you know, some emerging market asset class.

Well, the Bank of England has bought a lot of the bonds over the last 18 years.

It is now selling a lot of them back into the market.

That's part of the reason that the yield has been pushed up.

But one reason you don't want the central bank to be an outright holder of a large proportion of the public debt is that

that can contribute to inflation.

You know, if you have the central bank monetizing the debt, then there's no constraint on the government's ability to issue or to make new spending commitments.

So it is in principle, it's a good idea to have a central bank with a relatively smaller footprint in financial markets and allow the price discovery to take place in the market.

Well, we've heard this recently.

There was a column in the FT, actually, from somebody suggesting this.

But again, it kind of comes down to the point about what view you want to take on the value of sterling and whether that's going to stay constant or depreciate.

And so it would be a bit of a punt for the government to start doing that.

This is what happened during the Asian financial crisis, where you had all of these countries in Southeast Asia who had issued debt in US dollars.

And then when the money flowed out, they didn't have the dollars to make those interest payments.

I think it could get worse before it gets better.

I think one of the risks here is that there could be a challenge to Sir Keir Starmer, the prime minister.