Interest rates impacting debt costs slower in UK than any other G7 country

Fiscal Risks and Sustainability Report

The government’s response to the Office for Budget Responsibility's 2023 Fiscal Risks and Sustainability Report (FRS) found that rising interest rates affected the UK's debt servicing costs more slowly than the other G7 countries.

Published alongside the OBR's Autumn Statement forecast, the report said that the UK's refinancing costs and debt servicing costs were impacted "more slowly" than any other G7 country. This was due to its history of issuing a high proportion of long-dated gilts. The assets lowered annual refinancing needs and reduced exposure to interest rates, "all else equal", the report said. However, this did not mean this method of debt management was without risk, as the FRS addressed the sensitivity of the consolidated public finances to rising interest rates had increased due to quantitative e...