Clegg’s latest lie: UK was on verge of a “sovereign debt crisis”

Right-Wing Watch

This morning the deputy prime minister Nick Clegg repeated the now discredited claim that when the coalition formed Britain was "on the edge of bankruptcy".

On the Today programme this morning deputy prime minister Nick Clegg repeated the now discredited claim that when the coalition formed Britain was “on the edge of bankruptcy”. The argument dates from a December 2008 Telegraph article by David Cameron and is an important component of the government’s “there is no alternative” defence of its policy of spending cuts.

Despite Mr Clegg’s claims UK bond yields – the best measure of how the market perceives the risk of default – were near record lows in May.

In fact the yield on UK government ten-year bonds was only 3.84 per cent on the day on the general election. It closed on Friday at 3.62 per cent. This does not look like the bond yield of a country that was “on the edge of bankruptcy”.

Greek bond yields soared to over 12% in May, whilst Irish yields hit over 9%. There is simply no comparison. If a yield of 3.84% implies the “brink of bankruptcy” then it is hard to see how George Osborne is so confident that the UK bilateral loan to Ireland, with a yield more than twice as high, will ever be repaid.

Former Treasury Permanent Secretary Andrew Turnbull has already made clear what he thinks of the “brink of bankruptcy” claim, as politics.co.uk reports:

“Well I always thought that we were capable of producing a financial settlement that wouldn’t take us into Irish and Greek problems,” Lord Turnbull told the committee.

“A very large part of our debt was domestically held. If people are going to sell gilts they’ve got to buy something else. Who are these great shining examples of people who are issuing rock solid debt you want to buy?”

When pressed on whether he thought the UK was on the brink of bankruptcy, the peer replied: “No, I don’t.”

BBC Economics Editor Stephanie Flanders has written that:

Whatever you think about the fiscal mess that the coalition inherited, these are not the characteristics of a country on the “brink” of bankruptcy or default.

It’s time that Nick Clegg stopped repeating old Tory attack lines.

Update 1615hrs

Listen to Nick Clegg’s lies:

No related posts.

70 Responses to “Clegg’s latest lie: UK was on verge of a “sovereign debt crisis””

  1. ocean

    @ Chris
    From your link:
    “The outcome is that most of our money comes into existence when banks create credit by lending or spending, and simultaneously creating a ‘demand deposit’ or Bank IOU held by the recipient borrower or supplier”.

    ‎”Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits.” Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man in Britain.

  2. Chris Cook

    @ ocean

    I have read that quote many times, and agree with every word of it, but th efact is that in the 21st century banks are simply no longer necessary.

    In order to replace the current unsustainable (and terminally knackered) system, it is necessary to have an alternative which will work in the real world. I have seen several such proposals; such as Social Credit; FEASTA’s Liquidity Network;scores of complementary currencies; and the Positive Money proposal, which has much to commend it.

    But in every case the problem lies in the transition to a next generation networked system. In my view, there is no longer a need for a middleman – whether Treasury; Central Bank or Private Bank – to come between providers of credit and users of credit, whatever the basis of credit happens to be.

  3. worldfootballed

    RT @leftfootfwd: Clegg's latest lie: UK was on verge of a "sovereign debt crisis": http://bit.ly/eK8ll8 writes @DuncanWeldon

  4. Mike Gapes

    RT @leftfootfwd: Clegg's latest lie: UK was on verge of a "sovereign debt crisis" http://bit.ly/ePHOlC

  5. Amanda Ramsay

    RT @MikeGapes: RT @leftfootfwd: Clegg's latest lie: UK was on verge of a "sovereign debt crisis" http://bit.ly/ePHOlC

Comments are closed.