The UK ten year gilt rate - the benchmark for the cost of government borrowing - reached a record low today of less than 0.5%. This is how the FT has plotted the rate:
The last time the rate got this low was after the EU referendum: now it's back in the same doldrums as it hit then.
The rate is, of course, a reflection of the market's lack of confidence in a successful Brexit outcome. In effect money is flooding into gilts because the markets think business is going to be hit hard by Brexit, and so they're fleeing for safety. That's lesson one from this.
Lesson two should be that the government should be planning to borrow in a serious and coordinated fashion to exploit this opportunity, which effectively means that borrowers are willing to pay the government to hold their money. But there's no sign of that. Boris might say he's going to 'flash the cash' but 'serious' and 'coordinated' look like asks beyond this government's capability.
And so the economic mayhem will continue.
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Boris Johnson would say he is looking to increase public investment. Matt Hancock, the Health Secretary, was doing the rounds of the TV studios this morning announcing new and/or upgraded facilities at 20 hospitals. Presumably these have either been through the planning process and ready to build, so not new money then, or are genuinely new facilities still to be planned for.
Much was made a few days ago of the increase in police numbers by the ‘proverbial’ investment to finance an increase of 20,000 over the next three years. Fine, but 8,000 posts are lost each year through natural wastage. Tories claim that an extra £1 billion extra has been spent this year on the police, may be so, but raised off the backs of council taxpayers which is regressive.
This is all smoke and mirrors, just part of the narrative of ‘you are never going to have it so good’ , for when we exit the EU without a deal.
But they could have made those decisions whilst still remaining within the EU with no constraints at all but lies, distortions and untruths to suggest otherwise.
Our former local police station is now a block of rather pricey flats. Where are these new officers, assuming they ever arrive, going to be stationed?
I’ve been thinking the same thing for ages. Gilts are not like other debt, the interest rate when they are taken out stays for the lifetime of the debt. The UK’s debt to the US over Lend Lease during WWII which we only finally paid off fairly recently was at 1940s rates over its lifetime. Part of why it took so long to pay off, you pay off the higher rate stuff first.
As you say a competent govt should be borrowing in a coordinated way to pay for infrastructure improvements and repairs. These days infrastructure also means legacy computer installations and government is apparently very bad at that. So get it fixed.
Hey Richard, on another note, guess it is time you and John apologised to Jersey.
https://www.bailiwickexpress.com/jsy/news/jerseys-tax-regime-not-harmful/#.XUklU-hKjIU
That’s been reported for many years by many panels using out of date criteria
And the goalposts always needed moving again
They still do
The only apology due is by Jersey for international economic warfare against other states
‘The only apology due is by Jersey for international economic warfare against other states’
The OECD seem to disagree with you, but hey, what’s the view of a global organisation worth relative to a blogger with statist fantasies.
In fact, as a self professed liberal, it’s interesting that you don’t appear to support an individual’s choice to organise their affairs in any legal manner they so chose when they believe that their State, encouraged by those who abhor personal freedom, attempt to wage economic warfare against them.
You should in fact be congratulating Jersey, given that ECOFIN and the OECD in the last 12 months have found its practices not to be harmful, in providing a safe haven from financial oppression of individuals by unscrupulous regimes.
Perhaps I won’t hold my breath
You shouldn’t
The harm of the 0% tax regime goes on
And the OECD and others know it
Do you honestly think BEPS was for nothing?
My worry is that Johnson will do a kack handed form of MMT and then thoroughly discredit the theory/practice thereafter. How can MMT work without an effective tax policy, free ports and dodgy trade deals and economic mayhem – a No Deal?
As I write, the online war of lies has no doubt already started…………………………