But nobody, excluding perhaps those with reason to delude themselves, can doubt that the Budget caused the crisis of confidence in the British public finances.
Not that we should listen to Nick Timothy on anything, let alone economics.
There was a collateral based liquidity crisis in defined benefit pensions plans. Not a crisis of confidence in British public finances.
If you don’t identify the problem correctly then you’re never going to get the answer right, are you?
“There was a collateral based liquidity crisis in defined benefit pensions plans. Not a crisis of confidence in British public finances.”
Well yes and no. The actual crisis requiring BoE intervention the other week was the pension fund’s little problems, yes, but the underlying reason for their crisis was rising rates on long term UK Government debt. That wasn’t rising because people thought the UK was becoming a better long term risk to lend money to. And the UK is suffering a greater rise in rates than other countries/blocs. We were pushing 5% (currently about 4.5%), 30 year US treasuries are about 4%, 30 year German bonds are 2.3%, France is about 3.25%. Only a basket case like Italy is worse off than us at 4.8%. So it is true to say the market has ‘concerns’ about UK debt. And is pricing it accordingly. At some point that could become a full blown crisis, who knows? We are in Italy country now, anything could happen.
Crises of confidence can be based on nothing but rumour; there doesn’t actually have to be an underlying cause. There are a lot of vested interests, foreign and domestic, benefitting from this chaos.