The National Debt
Where does the money come from?
The National Debt or ‘Public sector net cash requirement'(PSNCR) is the additional revenue that needs to be borrowed in order to fund government spending where:
Government spending > Taxation
1.Financial or Banking sector – This Borrowing is the main source of financing for the PSNCR. This is borrowing from banks and building societies operating in the UK.
2.Non-Bank private sector – This sector is comprised of: commercial institutions, financial institutions (in the private sector) and individuals. Many of these loans will be made in the forms of bonds, some with set interest rates. the bonds are sold at auction so may be sold for less than their ‘maturity value’.
3.Overseas or Foreign sector – This type of borrowing will be largely from foreign financial institutions and generally only counts for a small proportion of the UK’s national debt.