The Great Debate UK
Why we need a bond market crisis
Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
The spirit of Britain’s Christmas is looking disconsolate this morning. Santa Claus has failed to deliver what our democracy most needed. No, not a deal to let the French have the 2012 Olympics in exchange for a bottle of Beaujolais Nouveau. Nor the nomination of Tony Blair for the Nobel Peace Prize. Number one on this year’s wish list was something more realistic, and maybe far closer: a gilt market crisis.
To see the consequences of Santa’s negligence, consider the outlook for 2010. At present, the two main parties have adopted wait-and-see policies for dealing with a budget deficit approaching £200 billion or about an eighth of our GDP.
Neither is proposing to do anything serious until after the election, due no later than May. At most, we have had government promises about what spending would be sacrosanct, leaving us to imagine for ourselves the devastation that will have to be inflicted on whatever is not ring-fenced.
