I used to write about bond markets, so I speak with some authority when I say this: bonds are boring. Really, most normal people find talk of gilts and yields extremely tedious. Likewise, terms like debt and deficit are off-puttingly technical and easy to mix up. Basically, the public finances are hard to get excited about.
But getting people excited about bonds and debt could well be a vital factor in deciding the next general election. Today, Tories are feeling chipper. They think the Truss-Kwarteng non-budget frames the next election as a stark choice between exciting Tory tax cuts and boring Labour managerialism and taxes.
Missing from the debate today, because there is no OBR or Treasury forecast for the public finances, is any discussion of debt and deficits. A key challenge for Labour will be starting that discussion and keeping it going.
It is an unavoidable fact that the government’s choices are going to increase the UK’s national debt. That debt, in the form of outstanding loans – gilts – must be serviced. Before today’s statement, the national debt was equal to around 96 per cent of GDP and Britain was on course to spend approaching £100 billion on debt interest this year.
Those numbers are not small, and they will rise.
Advocates of the Truss plan say that’s fine. They note that UK debt levels are mid-table by international standards: France, Japan and the US owe more, for instance. This is a new era, they argue. Developed economies can and should borrow more to support economic activity.
The challenge for advocates of Trussonomics and their sanguine attitude to debt is a huge shift in position from the one they took a decade or so ago. The 2010 general election was largely fought (and partly won) on the Conservative premise that the national debt was a direct problem for households and must be reduced.
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