What do high levels of government debt mean for equities and bonds?

SPONSORED CONTENT - The situation may not be as bad as it looks.

Unless you’ve been living in a cave, you can’t help but have noticed that the government is spending a lot of money. In turn, that means that government debt is increasing rapidly. At the end of February 2020, the amount of money owed by the public sector to the private sector in the UK – the national debt – stood at roughly £1.8 trillion, which equates to 79.1% of gross domestic product (GDP).

But as the weeks and months roll by that number will surely grow. The budget deficit (the gap between government spending and the tax take) came in at £61.36bn in April, compared to £10.2bn for the same month last year. Quite where the level of national debt will end up by the end of 2020 is anyone’s guess – but it seems a racing certainty that it will rise above £2 trillion. Should investors be worried?

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