Recommendation 10

We asked the OBR whether any improvements could be made to government’s borrowing processes. The OBR expressed a desire for more information on the owners of UK gilts held overseas, which it said represented arounds 25% of all UK debt – the second highest in the G7. It explained that foreign investors were “more fickle and more flighty than domestic investors” because they were less committed to holding UK gilts over the long-term.16 The OBR told us that compared to domestic investors, such as UK pension funds, foreign investors were more interested in “rates of return” and were more likely to switch to German or Japanese government bonds should the attractiveness of UK gilts fall. The OBR said that having a better understanding of the owners of UK debt held overseas would be advantageous from a “risk management perspective” because government will have a better sense of how sensitive these investors are to market changes.17