LONDON: The UK Treasury is exploring a significant increase in the bonds it sells to retail investors, a move that analysts say may draw in as much as £70bil (US$84bil or RM359bil) for financing deficits in the coming years.

The move would help Chancellor of the Exchequer Jeremy Hunt raise money at a time of economic turmoil and alleviate the pressure on traditional investors, who are being asked to shoulder record sales of UK debt.

Luring in savings from households, which traditionally have limited access to the gilt market, would tap into some £1.7 trillion in deposits that swelled up when pandemic lockdowns prevented spending on leisure, hospitality and tourism.

“There is plenty of cash in the household sector in the United Kingdom that could potentially be put to work in other ways,” said Imogen Bachra, head of UK rates strategy at NatWest Markets.

“We do see scope for some borrowing to be financed via bills and, more innovatively, through heavier reliance on retail investors.”

She said under the most optimistic scenario, the Treasury could raise up to £70bil from households and short-dated bills.

The more likely outcome is more in the range of £40bil to £50bil .

That’s still more than double the most previously raised through National Savings & Investments (NS&I), the government bank that links with consumers. NS&I sells premium bonds and tax-free savings accounts and fed £23.8 billion to the Treasury in 2020-2021.

 - Bloomberg