Private financial institutions – banks, pension funds, investment trusts and also private households.
27% is held by overseas investors (e.g. American investment trusts/Japanese banks)
23% is held by Bank of England – as part of Quantitative easing/asset purchase programme.
These are bought by private sector institutions such as pension funds, investment trusts and banks. The majority of these private sector buyers are domestic financial institutions. Most UK government debt is owned by the UK private sector. From 2009-12, the Bank of England has pursued a policy of Quantitative easing which involves buying gilts from the private sector. Therefore, there has been a growth in the % of UK gilts held by the Bank of England.
Notes about government debt
The government needs to borrow because it spends more than it receives in tax revenue.
To finance this shortfall the government sell bonds, gilts, and treasury bills.
In the UK government debt is managed by the DMO Debt Management Office
Government debt is the accumulation of past borrowing. The government’s budget deficit adds to its total debt. It borrows by selling ‘gilts’ and bonds. In return purchasers of bonds get paid an interest from government.
Government debt is different from the external debt of a country (the total owed by private and government sector to foreign debtors)
It is also different to the balance of trade (concerned with the level of UK imports and exports)
Why do people lend buy gilts? (effectively lending government money)
Government bonds are seen as a safe investment. The UK has not defaulted on debt in the past. It is a safer investment than shares – which can go down in value.
Rate of interest. Buyers of bonds get an interest on the bond. Some bonds are ‘index-linked’ which means the rate of interest varies with inflation. If investors are nervous about inflation reducing the value of gilts, they can buy these index-linked bonds
In a recession, demand for government bonds tends to be higher because of banks, companies are more nervous about lending and investing. Government bonds are a safe investment for turbulent times.
Pension funds need to invest contributions for future payouts. Government bonds provide a secure part of the portfolio.
Companies like Apple may have a large surplus of profit and high levels of savings. Bonds are a way to invest this money.
Households can buy bonds as a way to save and get a guaranteed bond yield (often higher than bank rates.
This shows people were willing to buy government bonds – despite lower bond yields.
Trends in ownership of UK debt
Since 2009, the Bank of England has purchased gilts. During this period, the % of gilts held by UK insurance and pension funds has fallen.
As of March 4, 2009, the total U.S. federal debt was $10,942,165,294,650.89 (just under $11 trillion) You can find latest figure here at US Treasury Direct
By far, the largest component of US public debt is debt held by the public, investors outside the federal government, including that held by individuals, corporations, the Fed, and foreign, state and local governments.
There are two kinds of national debt: intragovernmental and public. Intragovernmental is debt held by the Federal Reserve and Social Security and other government agencies. Public debt is held by the public: individual investors, institutions, foreign governments.
Who owns the most U.S. debt? Around 70 percent of U.S. debt is held by domestic financial actors and institutions in the United States. U.S. Treasuries represent a convenient, liquid, low-risk store of value.
The Department of the Treasury manages federal finances by collecting taxes and paying bills and by managing currency, government accounts and public debt.
All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).
The $34 trillion gross federal debt includes debt held by the public as well as debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself.
Why History Shows the United States Will Not Grow Out of Its Debt. The United States is approaching record levels of debt. Debt held by the public totaled 97 percent of gross domestic product (GDP) at the end of 2022 and is on track to exceed its previous all-time high, which occurred just after World II, by 2029.
If China (or any other nation that has a trade surplus with the U.S.) stops buying U.S. Treasuries or even starts dumping its U.S. forex reserves, its trade surplus would become a trade deficit—something which no export-oriented economy would want, as they would be worse off as a result.
If the U.S. was to pay off their debt ultimately, there is not much that would happen. Paying off the debt implies that the government will now focus on using the revenue collected primarily from taxes to fund its activities.
Interest Rates. Maintaining interest rates at low levels can help stimulate the economy, generate tax revenue, and, ultimately, reduce the national debt. Lower interest rates make it easier for individuals and businesses to borrow money for goods and services, which creates jobs and increases tax revenues.
Among other countries, Japan and China have continued to be the top owners of US debt during the last two decades. Since the dollar is a strong currency that is accepted globally, holding a substantial amount of US debt can be beneficial.
Who Owns U.S. Debt? U.S. Government debt is sold in the form of securities to both domestic and foreign investors, as well as corporations and other governments. U.S. securities issue Treasury bills (T-bills), notes, and bonds, as well as U.S. savings bonds.
One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.
China is one of the United States's largest creditors, owning about $859.4 billion in U.S. debt. 1 However, it does not own the most U.S. debt of any foreign country. Nations borrowing from each other may be as old as the concept of money.
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