23rd March 2012
The income seeker:
Government bond markets like a balanced budget. The Chancellor didn't have a rush of generosity and as a result 10 year gilts remained unchanged on the day. The Government also announced a consultation on launching perpetual gilts.
"This would enable the government to borrow when interest rates are at record lows, helping to manage down the country's debt over the long term. However, potential buyers of the debt – including pension funds – have warned they would have little use for long-dated issues."
For investors, a very long-dated bond might suit a giant tortoise or an optimistic one-year old, but given that interest rates are likely to rise eventually, it is difficult to see the attraction for conventional investors.