Pensioner bonds and government debt

Posted: January 19, 2015 by rainbowwarriorlizzie in Uncategorized

alittleecon

Pensioner bonds were launched this week. These are three year savings bonds available to those aged over 65 and paying an interest of 4%. There is also a one year bond paying 2.8%. George Osborne hailed the launch, saying:

“Our economic plan involves supporting savers and I’m delighted to report that it is proving hugely popular.”

Last week though, David Cameron said their economic plan was all about getting the deficit down and ensuring the government spent less on debt interest so it could continue to spend on things like the NHS. On his blog yesterday, Chris Dillow sets out some issues he has with these new bonds:

“Which interest rate would you rather borrow at – 4% or 0.6%? It sounds like a moronic question. Not if you’re the Chancellor, it’s not. In launching pensionerbonds yesterday which pay 4% pa over three years, he is choosing to borrow…

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