It is not unexpected that the UK borrowed just over £62 billion in April. This was as a direct consequence of the COVID-19 pandemic.

The government has needed to fund both business support loans and the job retention scheme.

The government’s independent forecaster, the OBR last week suggested a whole-year deficit of £298bn.

Unfortunately, one of the future consequences of this will be a downgrade in the credit rating of UK Government debt even further.

The ratings agency Fitch cut Britain’s sovereign debt rating to AA- at the end of March. They said then debt levels will jump as the government ramps up its spending to offset the near shutdown of the economy in the face of coronavirus.

The credit rating agencies can only picture a negative outlook on the UK Economy and hence there will further pressure on them to downgrade UK Governments bonds.

The consequences of this will be an increase in the government bond yields and a fall in the bond prices. This domino effect will mean that UK corporate bonds may well be effected in a very similar manner.