100-year bond will not solve the problem of Britain's high borrowing costs

Philip Booth responds to Government plans for 100-year bonds

Commenting on the idea of introducing 100-year bonds, Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:

"It is the responsibility of the government to fund its borrowing as cheaply as possible. It is therefore right to consider issuing very-long-dated bonds, but a more urgent matter is to increase the issue of index-linked bonds.

"Currently index-linked bond yields are negative - in other words, as Milton Friedman once put it, investors are paying the government for the dubious privilege of lending it their money. Inexplicably, the last government reduced the issue of index-linked bonds. This decision should be reversed and the government should fund much more of its debt through index-linked bonds. That way, investors will be more confident that the government will not use inflation to reduce its borrowing obligations and the government will be able to fund its debt very, very cheaply."

To arrange an interview with Philip Booth, Editorial Director at the IEA, please contact Ruth Porter, Communications Director , 077 5171 7781, 020 7799 8900, rporter@iea.org.uk.