The UK failed to find buyers for all of a £1.75 billion issue of bonds as investors rejected Prime Minister Gordon Brown’s economic plans.
Gilts fell after the Debt Management Office said investors bid for £1.63 billion of the 40-year issue. The last time the UK government was unable to attract enough investors was in 2002 when it tried to sell 30- year index linked gilts. The yield on the 4.5 percent gilt due 2049 rose 10 basis points to 4.55 percent.
This is not a good thing to happen when you have a 12% budget deficit. That is 12% of GDP, or about 23% of the money the UK government actually spends every year, or to put it another way, it means the Government spends 30% more than it takes in taxes.
Come to think of it if I spent 30% more than I earned, the ATM machine would stop giving me money pretty quickly.