Meta announces $95bn fundraising drive to pay for AI expansion – business live

UK government borrowing costs are dropping this morning, a welcome sign ahead of Wednesday’s budget. The yield (or interest rate) on 10 and 30-year UK gilts have both dropped by around three basis points (0.03 of a percentage point) this morning. City investors are hoping that chancellor John Healey avoids rocking the boat when he delivers his first budget, prioritising rebuilding fiscal headroom – although the jump in bond yields in recent months will have eaten into that borrowing cushion. There were reports last weekend that Healey will put billions of pounds into public financial institutions including the National Wealth Fund and the British Business Bank. Fresh funding into these so-called “PuFins” could boost the UK’s AI, defence and green energy sectors. Crucially for the chancellor, if a PuFin makes a loan or investment, the value of this financial asset is netted off against public liabilities, and the PSNFL measure of UK debt does not go up. However, the City may be wary of any trickery to keep government debt off the books. Andrew Wishart , UK economist at Berenberg , explains: double quotation mark Issuing loans to public financial institutions creates a financial asset that offsets the increase in outstanding government debt. If the investments that the PuFins make generate sufficient returns for the PuFins to repay their government loans, then long term debt sustainability is little affected. Limited transparency and the risk that the PuFins may suffer impairments on their investments will probably make bond market investors skeptical of the extra gilt issuance. Chancellor Healey should avoid a big increase in gilt issuance to fund such intra-public sector lending.