In the middle of an economic slowdown and a huge expansion in spending to reduce households’ winter fuel costs, the new UK government has just announced, in its new “mini-budget” its intention to drastically cut taxes on wealthy individuals and corporations. Not surprisingly, the price of UK bonds has plummeted, and interest rates have risen to their highest level since the 2008 financial crisis.
The Guardian quotes international market experts from ING saying this was a “perfect storm” for the UK, as “global markets shun sterling and gilts.” They continue
Price action in UK gilts is going from bad to worse. A daunting list of challenges has arisen for sterling-denominated bond investors, and the Treasury’s mini-budget has done little to shore up confidence.
“Little to shore up confidence” is such an elegant bit of English understatement, so extreme as to amount almost to deception. Like “the expanded hours for flight departures at Heathrow have done little to improve the noise pollution problem for residents near the airport” or “Herr Hitler’s new ‘Nuremberg Laws’ have done little to shore up confidence in fair treatment among Germany’s half million Jewish citizens.”