Gilts
Government backed stock, known as "Gilts" are loans made to the Government by, in effect, investors. Much of the national debt is comprised of Government Gilts, so when the Government needs to "borrow" more, it simply issues a new Gilt. Gilts provide income derived from interest payments and a final redemption. Inflation erodes away at the true value of the Gilts redemption, whilst the Gilts income will appear more or less attractive as the level of interest rates fluctuate. Broadly speaking, when interest rates rise the value of the Gilt will fall and vice versa. Many professional investors and fund managers invest part of their portfolio in Gilts because Gilts can help them to spread risk and/or provide income.