UK lawmakers warn of risks in huge government bond sales

Britain’s government needs to do a better job of monitoring risks posed by its sales of bonds which have surged after a string of shocks to the economy, a parliamentary committee said on Tuesday.

With Britain selling around 232 billion pounds ($294 billion) in government bonds this financial year alone, more information is needed to spot any unlawful activity including the manipulation of auctions, the Public Accounts Committee (PAC) said in a report.

Competition regulators found last year that five leading banks unlawfully shared competitively sensitive information between 2009 and 2013.

The PAC also said there was only limited information on the ultimate ownership of UK debt bought by overseas investors who hold around 25 per cent of gilts, the second-highest share among Group of Seven countries after France.

Meg Hillier, a lawmaker who chairs the PAC, said the scheduled retirement in June of the head of the government’s Debt Management Office, Robert Stheeman, added urgency to the need to prevent risks in bond auctions

“The loss of his experience is a risk for the organisation, especially with a number of his senior staff also approaching retirement,” Hillier said.

The PAC said the government should come up with a way to ensure it was securing value for money from its borrowing although it recognised that such monitoring was hard to quantify.

It said the ongoing sales by the Bank of England of bonds that it amassed to help the economy through the global financial crisis and the COVID pandemic posed “unprecedented challenges” at time when the government was also selling debt.

($1 = 0.7893 pounds)