Ministers are using low gilt yields as a sign of coalition "credibility", yet low yields are a sign of undermined growth, explains Cormac Hollingsworth.
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Ministers are using low gilt yields as a sign of coalition “credibility”, yet low yields are a sign of undermined growth.
Following worse than expected recession numbers last week, Treasury minister Chloe Smith rejected criticism the government’s policies were failing, citing the “credibility” that the coalition had secured.
Their evidence for this credibility is the low gilt yields. And on cue, the gilt yields went to a new all-time low last Friday. But the problem is that the more the coalition undermines growth, the lower gilts go. If growth was expected to rise, gilt yields would also rise. Unfortunately the same time, lower growth means higher borrowing.
• No, Gideon, low gilt yields aren’t good news, and here’s why 16 Nov 2011
So it’s quite possible that lower gilt yields are more a sign of panic about the economy than sign of credibility about the deficit. And it turns out that every time the City raises its expectations about the total borrowing of the coalition over the course of this parliament, gilt yield falls.
Hard to believe? Take a look at our graph below:
It’s time for the media to stop swallowing the credibility line and start holding this government to account.
32 Responses to “Lower gilt yields are a sign of panic not coalition credibility”
Anonymous
Funny, it’s almost like you’re trying to prevaricate.
Anonymous
Liar, liar, liar, liar.
Would it really hurt that much to tell the truth once in a while?
Every single statement in that post until (I’m a left-winger … is a blatant lie.
Anonymous
I see, you want to murder and drink the blood of the poor. Thanks for the official clarification.
(If you’re going to play dumb I can keep this up. Or you could admit your actual agenda)
Anonymous
Moron
I have already stated many times that I want people to be able to earn a living and that the rich should pay more tax than the poor. Are you unable to read?
My agenda is that guys should be able to earn an honest living.
Anonymous
I’m quite able to see the agenda you’re pushing for, yes, thanks for asking.
The rich pay “more tax” today. It’s still not remotely like their percentage of wealth, of course. It’s quite meaningless noise, without actual proposals, and given your clear hatred for the 99% I’d need to see full proposals and check them in detail before I believed a word of your motivations.
I expect I’d find a bunch of racist, neo-liberal hackery.