cancel
Showing results for 
Search instead for 
Did you mean: 

WW1 war debt... convenient or what?

Community Veteran
Posts: 13,923
Thanks: 515
Fixes: 7
Registered: 01-08-2007

WW1 war debt... convenient or what?

So.. I think most of us all recognise whats really going on with this but does David Cameron really think we're this stupid?
Brussels lands us a whopping great bill that has created a super huge storm across the country with more and more people declaring they've had enough of the EU and want out etc.
Now suddenly a huge financial bill of roughly the same amount rears its ugly head from WW1... something that nobody alive really has any memories of at all but conveniently the government have plenty of paperwork to back it all up.
WHAT A COINCIDENCE!!!
David Cameron tells the EU to get stuffed.. "I'm not paying that bill" he tells the people of the country and then quietly decides he needs to find a very similar amount to pay off an old bill thats been hanging around for decades - which has sudenly become a top priority.
Does he really think we're all that stupid?
I need a new signature... i'm bored of the old one!
18 REPLIES
Community Veteran
Posts: 16,848
Thanks: 1,135
Fixes: 13
Registered: 06-11-2007

Re: WW1 war debt... convenient or what?

Yes.
Community Veteran
Posts: 6,735
Thanks: 12
Registered: 02-02-2008

Re: WW1 war debt... convenient or what?

Maybe I read a different analysis, but the report I saw said it was indeed an old (possibly perpetual) debt from WW1 with a relatively high interest rate (by current standards).
It's being effectively being "remortgaged" at a lower rate which is bad for the investors but presumably good for the country's expenditure.
Though, as the market value of such products is related to the current risk and rate of return, it's probably not much of a hit in reality.
Community Veteran
Posts: 18,547
Thanks: 193
Registered: 12-08-2007

Re: WW1 war debt... convenient or what?

That's what happened. Cheaper to pay rather than leave it on the books. No conspiracy theory I'm afraid Roll eyes Roll eyes
Community Veteran
Posts: 16,848
Thanks: 1,135
Fixes: 13
Registered: 06-11-2007

Re: WW1 war debt... convenient or what?

Cameron has missed a couple of tricks, here, methinks....
WW1  why are we paying for making sure europe was free from german tyranny  ?
Surely Europe should be putting up some cash from each country to pay for their freedom...... ?
WW2  why are we paying for making sure europe was free from german tyranny ?
Surely Europe should be putting up some cash from each country to pay for their freedom...... ?
He should be banging THEM to pay up.... not arguing with them about what WE should be paying into the EU coffers....
Community Veteran
Posts: 18,547
Thanks: 193
Registered: 12-08-2007

Re: WW1 war debt... convenient or what?

Quote
The finance ministry said on Friday that it would redeem 218 million pounds ($348 million) of 4.0 percent consols - a rare type of bond with no maturity date - on Feb. 1 next year, to be funded by issuing new debt.
This is the first time this type of gilt has been redeemed since the late 1940s - in part because until recently it required lower interest payments than similar new debt.


Quote from: 7up

Now suddenly a huge financial bill of roughly the same amount rears its ugly head from WW1... something that nobody alive really has any memories of at all but conveniently the government have plenty of paperwork to back it all up.

Roughly the same valueHuh The EU is demanding £1.7B and we are paying off £218M Roll eyes
Community Veteran
Posts: 13,923
Thanks: 515
Fixes: 7
Registered: 01-08-2007

Re: WW1 war debt... convenient or what?

Well on the TV the other day artmo they were saying it was £2billion!!!
Would you really call that a coincidence?
@HPSauce while I agree with what you are saying and the actions would (normally) make sense, it seems odd that nobody seems to have heard of this debt until now - right when the EU is demanding money of roughly the same amount.
Coincidence?
I need a new signature... i'm bored of the old one!
Community Veteran
Posts: 38,251
Thanks: 937
Fixes: 56
Registered: 15-06-2007

Re: WW1 war debt... convenient or what?

For clarity
This explains it http://www.theguardian.com/business/2014/oct/31/uk-first-world-war-bonds-redeemed
Quote
As Europe marks the centenary of the Great War, the Treasury said it would pay off £218m from a 4% consolidated loan next February, as part of a redemption of bonds stretching as far back as the 18th century. They also relate to the South Sea Bubble crisis of 1720, the Napoleonic and Crimean wars and the Irish potato famine.
Almost £2bn of first world war debt remains, and the government said it was looking into the practicalities of repaying it in full.

Quote
Nangle has calculated that the government could save more than £300m if it pays off the War Loan bonds at face value of £100 each, which it has the right to do with 90 days’ notice.
.
Community Veteran
Posts: 13,923
Thanks: 515
Fixes: 7
Registered: 01-08-2007

Re: WW1 war debt... convenient or what?

From that very page OJ:
Quote
Almost £2bn of first world war debt remains, and the government said it was looking into the practicalities of repaying it in full.

So they are not going to pay the EU this extroadinary amount of money but suddenly they're looking at repaying this super huge debt that barely anybody has ever heard of at the very same time?
As I say... coincidence?
I need a new signature... i'm bored of the old one!
Community Veteran
Posts: 38,251
Thanks: 937
Fixes: 56
Registered: 15-06-2007

Re: WW1 war debt... convenient or what?

Not at all
They pay back however much it is and issue more bonds to the same value saving a chunk of interest payments
The fact that you hadn't heard of it is a bit immaterial  War Loan is well known - well I knew all about it and until recently it was a really rotten investment
This gives a bit of background http://en.wikipedia.org/wiki/Gilt-edged_securities
Quote
There exist eight undated gilts, which make up a very small proportion of the UK government's debt. They have no fixed maturity date. These gilts are very old: some, such as Consols, date from the 18th century. The largest, War Loan, was issued in the early 20th century. The redemption of these bonds is at the discretion of the UK government, but because of their age, they all have low coupons, and for a long time there has therefore been little incentive for the government to redeem them. However in early 2009, and again in late 2011, and at various times since then, the yield on these gilts, and in some cases also the coupon, has been higher than the redemption yield on long-dated redeemable gilts, which implies that the market is pricing in the chance that the government might redeem these gilts at some point. The question of the redemption of War Loan has now been publicly raised. Because the outstanding amounts are relatively very small, there is a very limited market in most of these gilts. In May 2012 the Debt Management Office issued a consultation document which raised the possibility of issuing new undated gilts, but there was little support for this proposal.
Community Veteran
Posts: 13,923
Thanks: 515
Fixes: 7
Registered: 01-08-2007

Re: WW1 war debt... convenient or what?

Wellmay it is legit then but you have to admit.. the timing is impeccable.
I need a new signature... i'm bored of the old one!
Community Veteran
Posts: 38,251
Thanks: 937
Fixes: 56
Registered: 15-06-2007

Re: WW1 war debt... convenient or what?

No I don't
All he announced was that he was repaying £218 million
The fact that nearly £2 billion remains is rather irrelevant and is well known by the markets
Community Veteran
Posts: 6,824
Thanks: 1
Registered: 27-10-2012

Re: WW1 war debt... convenient or what?

There is nothing new here. This happens week in, week out - the only reason it's hit the headlines is the historical link.
There are a number of gilts (bonds issued by the UK government) that date back the 1920s, known as the "War Bonds" as they were used to finance WW1. The government is calling (telling investors it will repay their investment) one of those gilts because there is a saving to be made - https://www.thegazette.co.uk/notice/2224562. In order to pay off the called war gilt, all the government is doing is issuing other long term gilts.
Current conditions in the gilt market mean yields are at a historic low. The government sold £4bn 2068 gilts at a yield of 2.966% last week (http://www.dmo.gov.uk/documentview.aspx?docName=/gilts/press/pr281014a.pdf), so by repaying the 4% war bond (which was only a £218.4m issue and some 5% was owned by the UK government anyway) there is an annual saving of 1.034% or around £2.25m in interest.
They will call the 3.5% war bond also, which is significantly larger (£1,938.6m). This would save the tax payer some £25m a year in interest payments.
To be clear - the government is just refinancing its debt to get a better deal.
nanotm
Pro
Posts: 5,674
Thanks: 109
Fixes: 1
Registered: 11-02-2013

Re: WW1 war debt... convenient or what?

something they have been doing fairly consistently since they took office, another problem is the media's insistence that 100 million is the same as a billion (something Gordon brown started when he declared he was paying off the national debt back in 1998, when what he actually meant was he wasn't going to refinance a 200million loan once he cleared it with the cash raised from the pension raid...

the biggest problem is that there just refinancing them at a lower rate rather than actually clearing the debt, sure they remove the higher interest payment but swapping it for a fixed term bond doesn't actually help the national finances, would be a lot better if they were actually paying some of this stuff off and saving all those wasted billions on interest payments, still we've all got the years of brown and blair to thank for the mess that is the nations finances ....
just because your paranoid doesn't mean they aren't out to get you
Community Veteran
Posts: 13,923
Thanks: 515
Fixes: 7
Registered: 01-08-2007

Re: WW1 war debt... convenient or what?

Quote from: nanotm
something they

OJ please... LOCK THIS THREAD before you're forced to Wink
I need a new signature... i'm bored of the old one!