George Osborne takes risk with rhetoric

May 17, 2010


George Osborne once said he spends more time thinking about politics than he does about economics.

Now that he’s Chancellor of the Exchequer, he probably needs to think about the latter a bit more.

Markets are likely to forgive him his first news conference at the Treasury today. But they may not always be so kind.

His warnings that Britain could end up like Greece were skirting the line when in opposition but could really put the frighteners on investors who are already very nervous about sovereign debt.

Ditto the comments on black holes. Politicians love black holes but the last thing the guardian of the nation’s public finances need to be telling potential buyers of UK government bonds is that the situation is even worse than they thought.

Markets are not stupid, Osborne said this morning. But while they may identify his comments as political rhetoric for now, they could just as easily take him at his word. And that could spell real trouble for the pound and gilts.

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