The UK Budget next week could lead to a surge in new issuance of gilts, as the Chancellor looks to make up a budget shortfall, the Royal Bank of Canada predicts.
Research from Sam Hill at RBC, reported by the Financial Times, finds that the government will need to ramp up its borrowing requirements following market volatility hitting the balance sheet.
The research states that the current volatile markets will wipe out the £27bn bonus that Chancellor George Osborne had banked from the previous year, meaning he will have to hunt elsewhere for money.
As a result RBC predicts the government will issue £149bn of government debt in 2016/17, compared to £125.4bn in 2015/16.
Any future gilt sales will be announced after the March 16 Budget.