When the International Monetary Fund publishes its annual assessment of the UK economy next month, one of the vulnerabilities it will be focusing on is why the British Government pays more to borrow from markets than any other major advanced economy.

For Rachel Reeves, the Chancellor, it’s unlikely to make comfortable reading. She’s made the idea of “securonomics” – balancing the books and immunising the economy from external shocks – her calling card.

The IMF will no doubt sugar-coat its criticisms in suitably diplomatic language, but the underlying message is likely to be the very reverse.

That fiscal buffers remain inadequate, that spending pressures are particularly elevated relative to peers, that taxes are too high to support growth and – when combined with generous benefits – to provide incentives for work, that there are major issues with healthcare provision, and that the UK economy remains acutely exposed to higher energy costs.

Sadly, this litany of negatives is ever more evident from the way financial markets price UK risk.

Up until a few years back, term premia for the UK – the extra compensation investors demand for buying longer-term bonds – were pretty much middle of the pack when compared to others.

But that changed during the Liz Truss mini-Budget debacle, and despite the Chancellor’s best efforts to represent herself as a paragon of fiscal responsibility, Britain has remained firmly confined to the naughty step ever since.

Just recently, the gap in term premia has again widened; it’s too long after the event to attribute this difference to the lasting damage Truss did to Britain’s fiscal reputation, even if today’s Labour Government is prone to keep banging on about it by way of excuse for its own failings.

In any case, as a share of national income, the UK Government currently pays more in debt interest than at any stage since the 1980s, when interest rates were far higher than now.

At a forecast £111.2bn for the last financial year, these costs have mushroomed to nearly a third of the total welfare bill and are today not far short of what the Government spends on the state pension.

If Britain enjoyed the same interest rate on 10-year money as even Italy, it would make a significant difference to the UK’s fiscal predicament.

There are admittedly some important structural reasons for those high costs. The decline of Britain’s once sizeable private sector final salary pension schemes has removed one of the primary sources of domestic demand for UK gilts.

Bank of England buying under once massive quantitative easing (QE) programmes has also ceased, and indeed is now being reversed, leaving the British Government gilts market increasingly reliant on volatile overseas and hedge fund investors to soak up the tsunami of UK debt issuance.

The loss of these two sources of demand combined may have added around one percentage point to the Government’s borrowing costs, according to some estimates.

It’s complicated, but QE has further added to debt woes in that, under an indemnity, the Government is required to pay a higher rate of interest on Bank of England reserves than it would have done had QE never taken place.

Other structural factors include a particularly high concentration of index-linked gilts in the overall mix of government debt, making debt servicing costs especially susceptible to the UK’s relatively high and persistent rate of inflation.

In mitigation, it should be pointed out that both Australia and New Zealand also pay more than peers for government debt, even though they are not as fiscally stretched as the UK.

It may be that open, relatively trade-intensive Anglo-Saxon economies outside the protections of major currency blocs are therefore peculiarly vulnerable to higher term premia.

By contrast, Italy enjoys the implicit protection of the German chequebook as a member of the euro.

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