Assignment 1 - Borrowing costs

In September 2025, UK government borrowing costs reached their highest level in 27 years.

Explain how rising borrowing costs can influence inflation, investment, and overall economic growth. Discuss what actions the government and Bank of England could take to restore confidence in the UK economy.

Structure

Introduction

  • What is cost of borrowing?

  • How does it affect the UK economy?

  • What is the role of the Bank of England?

  • Current State the UK economy

Influence of borrowing costs

How borrowing costs affect inflation

  • Define inflation

  • Describe its effects on the UK Economy

  • What actions the government and BOE take to restore confidence and mitigate inflation

How borrowing costs affect investment

  • Describe investment into the UK economy

  • Describe its effects on the UK economy

  • What actions the government and BOE take to encourage investment

How borrowing costs affect overall economic growth

  • Describe recent economic growth in the UK

  • Describe its effects on the UK economy

  • What actions could the government and BOE take to stimulate growth

Conclusion

  • Briefly mention November bill and what’s expected to happen

  • Summary

References

What would I like to mention?

  • Change of borrowing costs in last 27 years

  • Current rate of inflation - factors affecting inflation

  • Current state of UK economy - what’s causing a stagnant economy?

  • Factors affecting borrowing costs

  • BOE involvement

  • What actions are the governments taking?

Sources

Plan

Introduction

  • What is cost of borrowing?

  • What is a gilt?

  • How does it affect the UK economy? - higher/lower yields

  • What is the role of the Bank of England? - transfer from treasury in 1997

Brief history

Borrowing costs in 1998

  • State of the economy

  • How the government resolved the issue

Borrowing costs in 2025

  • State of the economy

  • How the government plan to resolve it - The November Budget

Influence of borrowing costs

How borrowing costs affect inflation

  • Define inflation

  • Describe its effects on the UK Economy

  • What actions the government and BOE take to restore confidence and mitigate inflation

How borrowing costs affect investment

  • Describe investment into the UK economy

  • Describe its effects on the UK economy

  • What actions the government and BOE take to encourage investment

How borrowing costs affect overall economic growth

  • Describe recent economic growth in the UK

  • Describe its effects on the UK economy

  • What actions could the government and BOE take to stimulate growth

Conclusion

  • Briefly mention November bill and what’s expected to happen

  • Summary