By Sonya Rabbitte, 13 June 2000 13:20
NEWS The UK government will reduce borrowing by £2.2bn this year, after raising £22.5bn through its third generation mobile licence auction. Following the auction windfall - which was four times higher than original expectations - the government cancelled one of the six remaining gilt auctions in this financial year, at which they had planned to raise £2.2bn. The Treasury will spend £5.9bn of the money on foreign exchange to repay foreign currency denominated debt. A further £3.5bn to £5bn will go on the government's programme to buy back gilts. A decision on how to spend the remaining £10.7bn has been postponed until November's pre-budget report. However, the Treasury has ruled out any further cancellation of gilt auctions. The Treasury has pledged to use the money to reduce short-term debt, despite calls from market analysts to invest in longer-term strategies like foreign currency assets to weaken the pound.
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