The UK government is considering the possibility of issuing special government bonds to finance additional defense spending, CNBC reports.
The initiative is supported by Chancellor of the Exchequer John Healey and former Chief Economist of the Bank of England Andy Haldane. Experts suggest introducing tax incentives for investors to attract part of the approximately £2 trillion held in bank deposits. Against the backdrop of these discussions, hedge funds have quintupled their short positions in British company stocks in the first half of 2026.
Historically, the UK has resorted to such borrowings in 1914 and 1917, but only $121 million was raised through the first issuance. During the Great Depression in 1932, 5% coupon bonds were converted into perpetual bonds with a yield of 3.5%, and in 2014 the government fully repaid the remaining £1.9 billion debt.
