© Reuters. A woman in a protective mask is seen at Andreas Grocery store after it received a delivery of fresh fruit and vegetables, as the spread of the coronavirus disease (COVID-19) continues, in London, Britain, March 20, 2020. REUTERS/Dylan Martinez
LONDON (Reuters) -Britain’s 2 trillion-pound ($2.8 trillion) debt mountain is becoming more exposed to inflation and interest rate shocks which are themselves becoming more frequent, Richard Hughes, chairman of the country’s budget watchdog, said.
Hughes said the Office for Budget Responsibility expected the current rise in inflation – which could surpass 3% according to the Bank of England – would be temporary as the economy bounced back after its pandemic lockdowns.
But the government’s debt stock was increasingly vulnerable to the risk of higher inflation and interest rates, standing at 100% of gross domestic product with shorter average maturities and more inflation-linked bonds, he told BBC radio.
“It used to be the case that governments could inflate their debt away. It is less and less the case as we go into the…
