The hysteria coming out of Westminster is monumental so for the record Rachel Reeves’s China junket does not mean she is ‘Missing In Action’, ‘Absent With Out Leave’ or any other military term for having done a runner.
She is trying to re-open a long-dormant economic dialogue with the world’s second-largest economic power – and some might suggest that this is a very good time to do such a thing!
Critics are saying she should be staying at home and trying to fix problems with interest rates and the cost of the pound (Sterling) that have pushed borrowing costs up, but her argument is that there is nothing to be done.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The official explanations for the changes are that costs have risen recently due to several factors:
- Global Economic Trends: There’s been a general rise in borrowing costs worldwide, partly driven by concerns over inflation.
- Investor Concerns: Investors are worried about the UK’s fiscal sustainability, leading them to demand higher returns on government bonds (gilts).
- Government Bond Sales: The UK has been selling a large number of bonds, which has also contributed to the rise in yields.
- Inflation Fears: Rising inflation expectations mean the Bank of England may keep interest rates higher for longer, affecting borrowing costs.
- Economic Growth Concerns: The UK economy is experiencing flat growth, which adds to investor uncertainty.
These factors combined have led to a significant increase in the yields (interest payable) on UK government bonds, making it more expensive for the government to borrow money.
Some say the markets have become skittish because of Reeves’s Budget last year, with its modest attempt to improve conditions for working people. Others, like Gary Stevenson, reckon the markets are trying to coerce the government into changing policy:
If the latter is accurate, it hasn’t worked; the government says the markets are functioning properly and it isn’t going to make any changes at this time.
There’s a big fuss over whether the government will be able to meet its own fiscal rules as a result of the interest rate rise – but this seems incongruous.
There are two rules. One – the stability rule – calls for the UK’s current budget to be in balance or surplus by the 2029-30 financial year, which is still a long way in the future. The other – the investment rule – says net financial debt should be falling as a share of the economy by 2029-30, which is just as far in the future as the demand of the other rule.
Reeves could happily sit out the current choppy period – and then, if she thinks market leaders have been trying to strong-arm her, penalise them with measures in her autumn Budget. I wouldn’t put it past her!
Concerns about whether the Office for Budget Responsibility will say the government is on course to meet its fiscal rules, when it reports on March 26, are red herrings in this mystery story. I remember prediction after prediction by the OBR, after it was formed by David Cameron and George Osborne; they were all wrong.
I wish I had video of those old George Osborne Budget speeches now; they would raise bitter laughter.
So if it’s a choice between Rachel Reeves staying at home and doing nothing useful or going to China and doing a few trade deals, then I say, let her go!
The other claim made by denigrators about the trip, of course, is that China cannot be trusted. The BBC mentions
growing concerns about the actions of China’s Communist leaders, allegations of Chinese hacking and spying and its jailing of pro-democracy figures in Hong Kong
But how does one deal with those issues without talking with the Chinese government?
And, looking at the critics, isn’t it a little hypocritical of them to be complaining about this if they were quiet about – for example – Boris Johnson’s ties to Russia that have left the son of a Russian spy still sitting in the House of Lords?
The bottom line is that this is a temporary blip and the economy is big enough to weather it. Everything else is scaremongering.
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Reeves’s China junket does NOT mean she is ‘Missing In Action’
The hysteria coming out of Westminster is monumental so for the record Rachel Reeves’s China junket does not mean she is ‘Missing In Action’, ‘Absent With Out Leave’ or any other military term for having done a runner.
She is trying to re-open a long-dormant economic dialogue with the world’s second-largest economic power – and some might suggest that this is a very good time to do such a thing!
Critics are saying she should be staying at home and trying to fix problems with interest rates and the cost of the pound (Sterling) that have pushed borrowing costs up, but her argument is that there is nothing to be done.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The official explanations for the changes are that costs have risen recently due to several factors:
These factors combined have led to a significant increase in the yields (interest payable) on UK government bonds, making it more expensive for the government to borrow money.
Some say the markets have become skittish because of Reeves’s Budget last year, with its modest attempt to improve conditions for working people. Others, like Gary Stevenson, reckon the markets are trying to coerce the government into changing policy:
If the latter is accurate, it hasn’t worked; the government says the markets are functioning properly and it isn’t going to make any changes at this time.
There’s a big fuss over whether the government will be able to meet its own fiscal rules as a result of the interest rate rise – but this seems incongruous.
There are two rules. One – the stability rule – calls for the UK’s current budget to be in balance or surplus by the 2029-30 financial year, which is still a long way in the future. The other – the investment rule – says net financial debt should be falling as a share of the economy by 2029-30, which is just as far in the future as the demand of the other rule.
Reeves could happily sit out the current choppy period – and then, if she thinks market leaders have been trying to strong-arm her, penalise them with measures in her autumn Budget. I wouldn’t put it past her!
Concerns about whether the Office for Budget Responsibility will say the government is on course to meet its fiscal rules, when it reports on March 26, are red herrings in this mystery story. I remember prediction after prediction by the OBR, after it was formed by David Cameron and George Osborne; they were all wrong.
I wish I had video of those old George Osborne Budget speeches now; they would raise bitter laughter.
So if it’s a choice between Rachel Reeves staying at home and doing nothing useful or going to China and doing a few trade deals, then I say, let her go!
The other claim made by denigrators about the trip, of course, is that China cannot be trusted. The BBC mentions
But how does one deal with those issues without talking with the Chinese government?
And, looking at the critics, isn’t it a little hypocritical of them to be complaining about this if they were quiet about – for example – Boris Johnson’s ties to Russia that have left the son of a Russian spy still sitting in the House of Lords?
The bottom line is that this is a temporary blip and the economy is big enough to weather it. Everything else is scaremongering.
Vox Political needs your help!
If you want to support this site
(but don’t want to give your money to advertisers)
you can make a one-off donation here:
Be among the first to know what’s going on! Here are the ways to manage it:
1) Register with us by clicking on ‘Subscribe’ (bottom right of the home page). You can then receive notifications of every new article that is posted here.
2) Follow VP on Twitter @VoxPolitical
3) Like the Facebook page at https://www.facebook.com/VoxPolitical/
Join the Vox Political Facebook page.
4) You could even make Vox Political your homepage at http://voxpoliticalonline.com
5) Follow Vox Political writer Mike Sivier on BlueSky
6) Join the MeWe page at https://mewe.com/p-front/voxpolitical
7) Feel free to comment!
And do share with your family and friends – so they don’t miss out!
If you have appreciated this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!
Buy Vox Political books so we can continue
fighting for the facts.
Cruel Britannia is available
in either print or eBook format here:
The Livingstone Presumption is available
in either print or eBook format here:
Health Warning: Government! is now available
in either print or eBook format here:
The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:
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