LONDON, July 14 Reuters High inflation will not help Britain39;s public finances in the same way as in the past because government debt is now more sensitive to changes in interest rates and prices, the chair of the Office for Budget Responsibility said on Friday.

Richard Hughes told the BBC that old notions of being able to inflate away high levels of public debt no longer applied.

The average effective maturity of British government debt had shortened from around seven years in 2008 to two years, Hughes said, meaning higher interest rates now feed into the cost of government debt faster than in the past.

This largely stems from the Bank of England39;s quantitative easing programme through which it effectively replaced longerdated government bonds with very shortterm central bank reserves, linked directly to the BoE39;s Bank Rate.

Secondly, around a quarter of Britain39;s government bond stock is linked to inflation by far the highest share among major advanced economies so the state increasingly compensates investors as consumer prices rise.

What that means is that inflation rises don39;t actually help the public finances in our country in the way they used to, OBR Chair Hughes said.

So higher interest rates, higher inflation, hit the public finances much more quickly, and mean that we start feeling the burden of as the interest rate rises much more immediately.

Britain in June had the highest rate of consumer price inflation among major advanced economies,…