Brother, can you spare £130 billion?

It’s funny to hear politicians solemnly talk about “debt-financing”, as if the cash comes down on a moonbeam from the lending gods. In truth, some poor souls have to buy the gilts the Treasury are flogging – and with what? Governments may well find it as hard as the rest of us to find creditors in this global downturn. Especially seeing as the Treasury is flogging a tanking pound, now tainted with the risk of Britain losing its AAA rating (unlikely, but so was the nationalisation of the banks). Consider the sheer scale of cash Brown wants from the City. In 2007/08 net gilt issuance was £29bn – bad enough, but that’s likely to more than treble to £100bn this year.

So who will buy? So far, the answer has been foreigners – who provided £3 in every £4 borrowed by the Treasury over the last three years according to Citi.