BlackRock’s UK chief investment strategist, Vivek Paul, has warned this week that pre-election promises of large tax cuts or spending increases could unsettle the bond markets again. There are clear echoes here of the turmoil that followed the Liz Truss and Kwasi Kwarteng mini-Budget back in 2022. How worried should we be?
These warnings should not be dismissed lightly. BlackRock is a huge global player, with more assets under management than any other firm. Sentiment can be fickle and market selloffs are often self-reinforcing.
The mini-Budget backfired in part because of mistakes that no-one is now likely to repeat, such as sidelining OBR
There are also some reasons to think the market in UK government bonds, or ‘gilts’, might be particularly vulnerable to a buyers’ strike. For a start, the market for gilts is small compared to those for US treasuries or Japanese government bonds (JGBs), or the pool of bonds issued by governments in the euro area.
Britain’s best politics newsletters
You get two free articles each week when you sign up to The Spectator’s emails.
Already a subscriber? Log in
Comments
Join the debate, free for a month
Be part of the conversation with other Spectator readers by getting your first month free.
UNLOCK ACCESS Try a month freeAlready a subscriber? Log in