The numbers are huge, but are not yet scaring the horses. The UK government will need to sell a ton of gilts over the next couple of years. Total issuance this fiscal year will be some £146bn. True, that includes some one-offs relating to the UK’s recent banking bail-outs. But the expectation now is of another bumper £130bn of gilt issuance in each of the next two fiscal years, according to Deutsche Bank. If the government’s growth forecasts prove too optimistic, as seems likely, that could be even higher. To put this into some kind of perspective, the government’s total gilt issuance in one year, at the start of this decade, was just £10bn.

What is surprising is how well the markets have taken this monster supply of government debt. Gilt yields have actually come down across the board. Two-year gilts, for instance, were yielding 5.5 per cent this summer, and now yield just over 2 per cent, having ticked up after the pre-Budget report. Yields have also eased at the long end. This seems counter-intuitive, but the explanation lies in interest rate cuts. Monetary easing by the Bank of England, and, crucially, the expectation of further cuts to come, influence gilt yields more than fundamental concerns over excess supply. Signs of stress have popped up in the market, though, with a rise in UK government credit default swaps, which measure the cost of protecting against default.