If the media was to be believed this morning, another debt crisis is looming as the government supposedly borrowed more in December than usual.
This is baloney. I note this in Yahoo Finance, themselves quoting Bloomberg:
The UK got some respite on Tuesday, as a syndicated offering of debt due in 2040 drew excess of £119 billion of demand. That beat the previous record for the 15-year securities originally sold in September and comes amid generally strong orderbooks for European sovereign debt.
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First, (on technicalities) the figure is big, in part, because of “interest payments of government debt”… but this is mainly due to the incorrect classification the inflation uplift on index linked gilts.
In the big picture, the fact that the government borrowed more than “expected” in December DOES tell us something – it tells us the economy is not growing as hoped/expected. Why? Because of the NI increases – about the worst way to tax…. and interest rates are too high.
Gilt prices are up year to date as gilt traders realise rates will have to be cut.
Don’t manage the economy based on what you think the gilt market “wants”… manage based on what people need.
Precisely
In an earlier post you mentioned that the government is attempting to save £3BN by curtailing disability benefits.
From this post it appears “the market” wants to deposit £119BN with the government for 15 years.
Would somebody please advise the Chancellor about basic arithmetic.
“Don’t manage the economy based on what you think the gilt market ‘wants’… manage based on what people need.” (Clive Parry).
Wise words. The problem is the Government thinks the gilt and money markets must determine everything in the economy, and only London matters; therefore, they are not looking for alternatives, and they do not know how else to manage the Government finances. Be done with it. declare an independent City State; it is there already, in all but name. The rest of Britain is both left to rot, and drained of any value it can produce, in gross conditions of adversity and rank neglect.
It doesn’t matter who is elected; we go round the same circle, doing the same things. London, and whatever the city claims is good for it decides the fate of the country; and it covers everything. The nation’s infrastructure is in terminal decline, with no investment anywhere; except in, or to London (Crossrail, 3rd runway, Heathrow; HS2 – so expensive to build anything in London even the spendthrift, money-squandering City initially balked at the cost of a new London terminus).