Update to 2020-21 government financing remit

This follows on from the last revision to the DMO’s financing remit for 2020-21, published on 16 July 2020, which laid out planned gilt sales of £385 billion up to end-November 2020. This update sets out plans for the remainder of 2020-21.

The financing arithmetic sets out the components of the government’s net financing requirement (NFR) and the contributions from various sources of financing. The updated financing arithmetic for 2020-21 is set out in Table 1.

The OBR’s forecast for the central government net cash requirement (excluding NRAM plc, Bradford and Bingley and Network Rail) (CGNCR (ex NRAM, B&B and NR)) in 2020-21 is £402.5 billion. This is the fiscal aggregate that determines gross debt sales and is derived from the Public Sector Net Borrowing (PSNB) forecast. The net financing requirement for the DMO in 2020-21 is £483.5 billion.

Planned gilt sales for the DMO will total £485.5 billion in 2020-21 and will be split by maturity and type as follows:

  • £167.9 billion of short conventional gilts (34.6% of total issuance)
  • £149.6 billion of medium conventional gilts (30.8% of total issuance)
  • £134.9 billion of long conventional gilts (27.8% of total issuance)
  • £33.2 billion of index-linked gilts (6.8% of total issuance)

HMT is also confirming today that NS&I’s net financing target for 2020-21 remains unchanged at £35 billion (+/-£5 billion). On 16 July 2020, this target was revised upwards from £6 billion (+/- £3 billion) to reflect the government’s increased funding requirements during the COVID-19 pandemic.

The funds raised from retail savers by NS&I are an important source of government financing. In the first six months of this financial year, NS&I raised £38.3 billion. With gilt yields currently at low levels, however, the government can currently raise finance more cost-effectively through gilt issuance.

Table 1: Financing arithmetic in 2020-21 (£ billion)

Budget 2020November 2020
CGNCR (ex NRAM, B&B and NR)(1)65.3402.5
Gilt redemptions97.697.6
Planned financing for the Official Reserves0.00.0
Financing adjustment carried forward from previous financial years(2)-0.818.4
Gross Financing Requirement162.1518.5
NS&I net financing6.035.0
Other financing items(3)0.00.0
Net Financing Requirement (NFR) for the DMO156.1483.5
DMO’s NFR will be financed through:
Gilt sales, through sales of:
– Short conventional gilts51.0167.9
– Medium conventional gilts34.2149.6
– Long conventional gilts42.3134.9
– Index-linked gilts20.633.2
– Unallocated amount of gilts8.00.0
Total gilt sales for debt financing156.1485.5
Total net contribution of Treasury bills for debt financing0.0-2.0
Total financing156.1483.5
DMO net cash position0.50.5
Figures may not sum due to rounding

(1) Central Government Net Cash Requirement (excluding NRAM plc, Bradford and Bingley (B&B) and Network Rail (NR)).

(2) The £18.4 billion financing adjustment in 2020-21 carried forward from previous years reflects the 2019-20 outturn for CGNCR ex, as first published on 23 April 2020.

(3) Prior to the publication of the end-year outturn in April each year, this financing item will mainly comprise estimated revenue from coinage.

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