Does the government of the United Kingdom (UK) need to borrow money? No, as the monopoly issuer of the currency it does not. So what is meant by government ‘borrowing’, and is it really borrowing in the same way that we as currency users borrow?
How 'borrowing' works in modern economies
One of the most misunderstood concepts in macroeconomics is government borrowing, and the mere mention of it seem to immediately illicit fear of impending economic decline. A monetarily sovereign country like the UK, with its own central bank, currency and resources does not need to borrow, per se. In fact, what we currently describe as 'borrowing' is really a government accounting adjustment.