Who is lending UK billions?

[HMSSophie]

When governments borrow money, who are they borrowing from?

Banks...merchant banks not high street ones.

Most of us live in a world where cash is limited. At best we can save a bit for treats, holidays etc.

Some people have more money than they could ever need. They make the excess work.....by earning interest.

My high school economics explained that there is a massive amount of very liquid cash flowing around the global money markets. It is totally immune to governments, politics, economic boom/bust, pandemics, natural disasters etc. It moves according to where it can grow.

Some people have more money than they could ever need. They make the excess work.....by earning interest

But interest on money borrowed by the UK government is almost nothing. Wouldn't it better to just keep the money to yourself.

Or is it a tax thing?

Money lent to governments is incredibly secure. Most investment organisations (such as pension funds) will have a mix of shares, property investments and bonds from very stable and secure organisations of which the government is at the top.

All investment companies will have some government debt due to that security.

Years ago I rented a rural cottage. My landlord was literally a Lord. My rent went into an account named something like ‘Account for the benefit of the grandchildren of Lord and Lady X’. Those kids were only 1 or 2 years old at the time. Sometimes these trust funds mature ar 21, 25, even 30 years old. So Lord X knew that in a million years of old age care etc he and his good lady would never need that money.

So the people looking after his money make it work for him...turn it into more money. They take a cut obviously. They make some risky investments with a good return and balance them with gilt-edged guaranteed low returns from the UK government.

Pension funds!

No I don't think these answers make sense to me. We are talking billions, not a few million quid. So won't it be the likes of Saudi Arabia and China governments that our government is borrowing money from?

In England, it will be the Bank of England. They have big vaults.

Bonds sold on the promise of a return on a specified date in the future.

They issue government bonds. Pension funds, fixed income funds buy them as well as huge corporations and insurance companies and banks who need to put their cash into them.
Yes there is hardly any interest but most people don’t care as when interest rates fall even further (which may well happen) the value of the existing bond goes up.

Your pension fund.

Investment funds and pension funds - both UK based and overseas.

If you have a pension fund google it and take a look at its holdings. If it’s a large one it will literally holds billions in government bonds.

Either by issuing bonds or international banks. IMF, ECB etc.

They issue bonds which are sold on the bond market. The more secure your government and market, the more buyers you have for your bonds, but the lower the return for the investor.

www.dmo.gov.uk/responsibilities/gilt-market/buying-selling/

Anyone can buy them. Pension funds are a big buyer.

The British Airways pension fund is £18billion - that’s just one company, and there are many many funds out there

China
Norway
Saudi Arabia

Large pension funds

all buy "bonds" - which is what Government debt is

www.google.co.uk/amp/s/www.bbc.co.uk/news/amp/business-50504151

HMSSophie www.bbc.co.uk/news/business-50504151
Mainly the Bank of England, and then theirs also other avenues of finance, plus as money is fiat currency, is lent based on fractional reserves. (although my knowledge is limited on that)

@TheDinosaurTrain

The British Airways pension fund is £18billion - that’s just one company, and there are many many funds out there

Pension fund managers are obliged to do the best for the fund - this may or may not be a terribly good idea.

This explains the OPs question quite well
www.economicshelp.org/blog/1407/economics/who-owns-government-debt/

Currently, I understand the Gov are creating bonds, which are being bought by the Bank of England, which is also doing quantative easing.
This means that the money will have to be paid back by future generations.
The quantative easing will cause inflation, (presumably to inflate away some of the debt), but again future generations will pay.
As far as I can see there are only 4 ways the Gov can repay the money;
Raise taxes (then there is which taxes, by how much, etc)
Cut Spending (which spending by how much)
Gov Borrowing (They could issue Bonds, but would need to have a good rating. In the past, some countries have defaulted on their bonds)
Quantative Easing - another word for printing money, and which causes inflation.
I suspect they will do a bit of everything, but too much 'austerity' depresses the economy, but then it will take decades to repay.

It really does baffle me I must say. I d not have the right kind of brain to actually understand any of this!

The two main sources of borrowing are George Agwdnononggo and cousin Benson.

China owns 1.1 trillion of US debt

QE hasn't caused inflation.