Recommendation 16

Not only does the government face growing pressure to borrow more in the future, but it also needs to ensure it can repay its current debts. The DMO issues gilts of varying length, ranging from one to more than 50 years. The period between a gilt being first issued and when the amount borrowed must be repaid to the original investor is called the redemption or maturity date. The NAO’s report highlighted that government gilt redemptions will peak in 2024–25, with £140 billion of gilts maturing.27 The DMO told us that some of the very short-dated gilts issued in 2020–21 during the pandemic were now starting to mature. The DMO also told us that the peak redemptions in 2024–25 will create a challenge for its “cash management function” in terms of needing to make sure that on any given redemption date, sufficient funds are available to repay the gilts. Close to a redemption, the DMO explained it will typically schedule an auction, thereby repaying maturing gilts by selling new ones. The DMO added that while the UK had a large number of redemptions to manage in the years to come, the amount was “much less” than some other major European countries.28