One hundred years after the outbreak of World War I, British Chancellor of the Exchequer George Osborne announced plans to repay some of the debt issued to help finance the conflict.
About 218 million pounds (NZ$448.5 million) of undated debt paying 4 per cent a year will be redeemed at par on February 1, Osborne said on Friday. The Debt Management Office estimates Britain has paid 1.26 billion pounds in interest since the bonds were sold in 1927.
National War Bonds were first issued in 1917 as part of an effort to raise money to finance the continuing cost of the four-year war. They were refinanced 10 years later by the then chancellor, Winston Churchill, with the issue of the Consolidated Loan.
The move represents the first settlement of an undated gilt in 67 years. About 2 billion pounds of World War I loans will remain and the Treasury is "looking into the practicalities" of paying off the debt in full, it said. The government pays just over 2 per cent to borrow for 10 years, based on current gilt yields. Britain's total debt is about 1.5 trillion pounds.
"The fact that we will no longer have to pay the high rate of interest on these gilts means that most important of all, today's decision represents great value for money for the taxpayer," Osborne said in a statement.
