William Norton is a solicitor anc Conservative candidate for Birmingham Perry Barr. He has been an adviser on tax affairs and legislation to the Conservative frontbench and was a member of the permanent staff of the James Review on Taxpayer Value between 2004 and 2005. William was also the referendum agent for the victorious No campaign in the North East Regional Referendum and is currently a trustee of the Social Affairs Unit and a borough councillor in Worcestershire.
The National Debt, famously, has never been repaid, and no one expects that it ever will be. Markets have been prepared to lend money to the British Government because it has always been able to service its debt by paying the interest owed and covering the redemption of gilts as they fall due.
All this assumes that the British state is not going to go bankrupt, i.e. that the Treasury is good for the money at whatever inflated rate it has to pay to get itself out of its latest mess. Gilts have always looked like retaining enough value to make it worth someone’s while to buy them.
But a government can run out of cash without going bankrupt in the formal sense of bailiffs coming round to seize the TV set, the sofa or the keys to the family car. Its creditworthiness can get so poor that it can no longer cover the interest on new debt, and it could be issuing debt in such quantities that its bonds no longer hold value. So, the markets stop lending any more money: there is a “gilts strike”. Before that point is reached, escalating interest costs may mean that a government has insufficient cash to cover its other essential services, such as telling people to eat five pieces of fruit a day.