End our Submission to "the Bond Markets" (Part 1 of 3)

We explain why "the bond markets" are a threat to the sovereignty of a nation, and why we should seek to reduce their power over our country.

TakeAway: The Bond Markets are basically the Loan Sharks for the Nation. We have to go to them, because we have no other option, with cap-in-hand, and ask for more money, and if they don't like us they can demand extortionate interest rates which will impoverish us as we attempt to pay them back. The answer – for any government – whether of the left or right – is to find a way to render the bond markets no longer central to public finance.

POLICY: To that end, when elected, we will use our public office to highlight the nature of our economic system; specifically, how the country acquires its money; how the bond markets work; the danger of bond markets; and the alternative ways in which we can finance our national needs. Our MSPs will publicise this vital issue, and seek to start a conversation around changing this central element of our modern national and world economy.

One of the reasons why "the Bond Markets" don't get much attention is because the market itself is shrouded in deliberately obscure terminology which is difficult to understand unless you know how to "crack the code". Yet, most people would be furious at the amount of our taxes which goes just to pay the "interest" on the national debt – which is basically just the reward to these profiteers for lending us their money!

According to the UK's Office for Budget Responsibility, in 2025-26 it expects the interest paid on the National Debt to be £111.2 billion, or 8.3 per cent of total public spending.

[ See "% Debt interest (central government, net of APF)" at obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/debt-interest-central-government-net ]

In this series of 3 articles, we aim to de-mystify "the bond markets" and to explain that there is another way to finance the needs of the country, without always having to borrow from the "Loan Sharks".

We are not looking to shut-down the bond markets entirely, but rather to seriously reduce their power over democratically-elected governments in a way which is compatible with the basic concept of electing governments which have the power to represent us – rather than electing governments which find themselves beholden to the financial power of the people in the undemocratic "bond markets".

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In his "Leader's Speech on 26th January" in 2026, the Leader of Reform UK in Scotland, Malcolm Offord pointed out that "Scotland is earning the equivalent of £750 per week and spending £1,000 per week."

He went on to say:

No-one here would run their household or business budget on such a basis, fortunately the UK Treasury backed by Sterling is content to fund this deficit on a friends and family basis, but international bond markets would not be so kind with an Independent Scotland. Borrowing costs would be extortionate without a creditable currency and international investors would demand swinging austerity to balance the books.

In Scotland, we are protected from bond markets because we borrow through the UK Treasury which gives us access to affordable borrowing thanks to the credibility of Sterling built up over 300 years. Surely, it should be a matter of pride and of principle for us all to unite around the timeless Scottish concept that we don't spend more than we earn and that we will bring that deficit down to a more respectable level?

[ See "Leader's Speech on 26th January" (2026) at pp5-6 at reformuk.scot/wp-content/uploads/2026/01/Leaders-Speech-26-Jan-2026.pdf ]

We highlight this speech, not to pick on Mr Offord or his party, but merely to help illustrate our point about the bond markets with a recent example taken from the political scene here in Scotland.

Now, what is he referring to?

Firstly, he is making the point that we should not spend more than we earn. That's a fair point. This is called the "household model" of government finance. Although, as we argue below, that's difficult to do at the governmental level.

Secondly, he speaks about the danger of "extortionate borrowing costs".

What are these and why would this happen?

If Scotland were independent, it would be looking to "borrow money" from "international investors" – these are corporations such as pension funds, and wealthy financial institutions. This would be money that it was unable to raise from taxing the Scottish population.

To do this, Scotland would issue "sovereign bonds". Bonds issued by nations are called "sovereign bonds". We would look to the "international bond markets" for people to "buy our sovereign bonds".

HOW IT WORKS

Please note, the following example has exaggerated interest rates in order to keep the explanation simple.

Say the independent Scottish government (or current British government) issues a bond. This is a document which promises a return to the person who buys it. It can help to think of it as a piece of paper, although these days it is in digital form.

A bond is saying: "If you give the Scottish government £100 for this bond, which we're selling with a rate of return to you of 10% interest, then we'll give you back [depending upon the payment schedule detailed in the bond] £10 a year until we finally pay back the original principal to you.

In reality, the bond will specify a repayment plan, plus the interest rate, and maturity date (the date it ends, when full repayment of the principal sum must be made).

Often bonds will "pay out" twice a year, and may last for several years. The interest rate written on the bond will not change during the entire life of the bond, regardless of how the interest rates in the rest of society fluctuate.

In effect, the government is "borrowing" the money from these investors with the promise of paying that money back, plus interest, on a regular basis into the future. The money owed to all of these various investors is called "the national debt".

However, if an investor does not have "confidence" in that government to repay the money in the future, because…

a) perhaps the government has a bad financial management reputation, or,

b) as per Mr Offord's point above, the country is clearly spending far more than it is earning and problems could be on the horizon, or

c) because the investor fears that the current government spending policy will lead to "inflation" and thereby reduce the value of their own investments in that country,

…then they are not going to buy the bond.

This would mean that the government would be short of that money.

So in order to entice "the bond markets" to buy the bonds and give the government their money, the government will respond by putting up the interest rate on the bond in order to make it more attractive to the investors. This higher rate compensates for the real risk which the lenders are taking in parting with their money.

This could mean that the government is forced to offer such bonds on the market offering, say, a 20% rate of return. This is the point that Mr Offord is making regarding "extortionate borrowing costs".

The investors – collectively known as "the market" – can even force up the interest rates of new bonds deliberately, and this can cause severe problems for the government. They can do this out of genuine concern for their investments, or they can do it because they simply want to bring down the government. We look at how they do this "bond vigilantism" in another article.)

Therefore, when it comes to repaying the bond to the investor at this higher rate of interest, the government is going to be paying out much more money than they'd ideally like!

In such a case, not only is the government already spending more than it is earning, but it is also now having to pay out much more on its sovereign bonds than it would prefer.

This means it is going to have to find even more money in order to pay out this "interest on the national debt". This would require even higher taxes in Scotland and/or more public-sector cuts in order to help find the money to pay back the interest.

It's getting itself into a very difficult situation!

All this is a direct result of the investor not having "confidence" in the government to manage its finances properly and the resultant fear that such money is not going to be available to pay out, as and when they expect, and/or that government policy is going to lead to inflation which will undermine the value of the investors' assets.

So what Mr Offord is saying is that while Scotland is already spending more than it is earning, we are covered – insured in a sense – by the rest of the United Kingdom because the British government has a credit-worthy history built up over 300 years. This means that people are generally happy to lend to the British government – that is, buy its bonds.

All that may be true, but we should question the political centrality of these "international investors". Why put them at the centre of the discourse? Why be so keen to keep them happy? We live in a democracy. Nobody voted for them to have a crucial say over our economy!

Let's put aside the point about the Scottish government spending more than it is bringing in via taxes.

The reality, after all, is that every government does this. It is extremely difficult for any country to bring in enough via taxes to cover all the expenditure requirements per annum, even with judicious "cuts" to public spending. There is almost always going to be additional funds which need to be raised from "borrowing" from "the markets".

This shortfall is called "the national deficit" – ie the amount raised from taxes is "deficient" for the needs.

THE BOND MARKET is THE GOVERNMENT'S "LOAN SHARK"

The fact that the government has to inevitably borrow from "the markets" therefore, puts "the markets" in a position of extreme power over any government.

It is like always having to go to the bank to borrow more money, or worse – the local loan shark!

Think about it! Our relationship to them is also one of fundamental subservience. We go to them. They don't come to us. We go to them with bowl in hand. "Please Sir, can we have some more money." In our relationship – they are the dominant one.

Now some people will excuse this relationship by saying: "The markets have a 'corrective' function." They call it "Market Discipline".

That is, they will argue that "the markets" help to correct a government which is spending beyond its means by making it harder for the government to raise money to continue to spend beyond its means. They will argue that this fact helps the government to rein in expenditure, to make appropriate cuts to reduce its overall expenditure, and to do so until such time as the markets have 'confidence' in the government again.

Yes, there is obviously some truth to that.

However, this "markets are corrective" theory presumes "the markets" are operating objectively with everyone's best interests in mind. It presumes "the markets" are a benign force.

It does not accept that "the markets" – because they are made up of real people with real political opinions – can also operate subjectively. They can operate with their own best political interests in mind (and not just their economic interests). It ignores the fact that "the markets" can be a malign force!

The markets can be deliberate political actors. They can work to subvert and bring down governments which they don't like, whether of the left or right.

And quite frankly, if you're a politician and you don't realise this fact of life, then you're not going to make it.

We must be wary of giving "the markets" power over us and our country.

We should see "the markets" as a potential threat to the sovereignty of our country, even to the very existence of our country. We should see them as a political force which must be understood as a potentially dangerous adversary.

The "bond markets" are not our friend. They are political actors who can threaten our sovereignty.

We should not just resign ourselves to their existence and imagine that whatever may be the democratic reality of our own country, we have to pay due homage to "the markets".

And this should make all those of us who are concerned about national sovereignty really think about what is going on. Consider it like this.

For example, when we go to them "to borrow money", we are in a position of a troubled person who needs to go to a loan shark, an aggressive doorstep lender. This is someone who will lend us money and demand high interest rates and who might use intimidation, and threats, even violence, to enforce our repayment.

Why should democratically-elected governments have to be "in hock" to these markets – markets which themselves are absolutely un-transparent. It seems wrong.

Seen in this manner, the markets are people who compromise our sovereignty – that is, our authority as a country which is able to make decisions over our future.

They also compromise our democracy – they can bring down democratically-elected governments.

So these are people we should:

1. Avoid as a matter of course.

2. Seek to never need.

HOW DO WE REDUCE THE POWER of "THE BOND MARKETS"?

A sovereign politician should be asking – "How do we reduce the power of the markets over our country and its economy." How can we do without them? How can we remove their power?

Well, just like an aggressive loan shark, their power over us comes from our need for their money. It comes from us having to borrow from them.

So, we have our answer!

If we don't need to borrow from them, then they have no power over us.

So here are some ways of reducing their power.

The first way – in an ideal world – would be not to spend more than we earn. At the government level, this means ensuring the amount you need for public expenditure is the same as the taxes you collect from the public. As we say, though, that's extremely difficult. It should be a general goal, but there's always going to be a shortfall; there's always going to be a "deficit".

The second way – and this is never properly publicised except by groups like Independent Green Voice – is that we should be able to create the additional money ourselves, so that the shortfall can be supplied by the democratically-elected government and not the bond markets.

Of course, this would be seen by "the markets" and the financial media as "reckless", as "fantasy economics", as "printing money" (as if money isn't always printed!), leading to a further fall in "confidence" and even less desire to lend to the government.

Nevertheless, it is possible, and it can be the correct thing to do. It would be striking a massive blow for the democratic and economic sovereignty of the people of the country.

At Independent Green Voice, our duty is to encourage that discussion so that the careful and judicious creation of money by a government is seen as a perfectly normal and uncontroversial thing to do.

Our goal is to remove the power of "the bond markets" – who are only interested in making money for themselves – over the people.

How much money should be created? Some people have made very good attempts at answering the matter.