Spending commitments mean more gilt issuance

A deluge of gilt issuance is expected in coming years as the UK government is forced into fiscal deficit to meet spending commitments. Andrew Roberts, fixed income strategy director at Merrill Lynch, views the Treasury's 2003-4 gilt funding requirement of £40bn as the start of a structural shift. 'There is an absolute slew of funding to come, with more than £35bn in gilt requirements from each of the three financial years after 2003-4 alone,' says Roberts. 'Against £26bn last year, £13bn the year before that and £10bn the year before that, we can see this as structural, not cyclical....