Is the UK government bankrupt? That’s the question in Gary Stevenson’s latest video clip, in which he explains the dilemma facing Keir Starmer and Rachel Reeves in a wonderfully clear manner.
Take a look:
So, for much of the time, governments manage to achieve an apparent magic trick of paying no interest on their debts, because economic growth and inflation cancel out the amount of interest that they have to pay.
But that isn’t happening now, because growth is down and so is inflation (because the Bank of England wants it that way), but debt interest is rising massively because the markets are saying (rightly or wrongly, it doesn’t matter) that they can’t be sure the government will be able to honour those debts.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The government isn’t bankrupt; it can’t ever be, because it controls the Bank of England and can just Quantitatively Ease its way out, as has happened before. The Bank has no option but to obey.
But before they go to that length, Starmer and Reeves will probably agree to make cuts to their policy platform – and that means deepening austerity (which never went away, remember; government departments are still labouring on budgets that are hugely reduced in comparison with 2010).
I wonder why nobody mentions all the bonds the Bank of England is apparently selling because it has unilaterally decided to pursue a police of quantitative tightening – it’s taking back the money it created for the then-Tory government during Covid.
Because the markets are already saturated with bonds – and they’re selling them because of uncertainty about the government – this means the bonds have to be sold cheap, with high interest rates on them – and that pushes up the general UK interest rate.
So why doesn’t Reeves invoke the Bank of England Act 1998 and tell the Bank to stop selling these bonds because it is not in the national interest to do so at this time?
I’ve been waiting for an answer to this. I may be waiting for some time to come.
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Is the UK government bankrupt? No, but is it even examining all its options?
Is the UK government bankrupt? That’s the question in Gary Stevenson’s latest video clip, in which he explains the dilemma facing Keir Starmer and Rachel Reeves in a wonderfully clear manner.
Take a look:
So, for much of the time, governments manage to achieve an apparent magic trick of paying no interest on their debts, because economic growth and inflation cancel out the amount of interest that they have to pay.
But that isn’t happening now, because growth is down and so is inflation (because the Bank of England wants it that way), but debt interest is rising massively because the markets are saying (rightly or wrongly, it doesn’t matter) that they can’t be sure the government will be able to honour those debts.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The government isn’t bankrupt; it can’t ever be, because it controls the Bank of England and can just Quantitatively Ease its way out, as has happened before. The Bank has no option but to obey.
But before they go to that length, Starmer and Reeves will probably agree to make cuts to their policy platform – and that means deepening austerity (which never went away, remember; government departments are still labouring on budgets that are hugely reduced in comparison with 2010).
I wonder why nobody mentions all the bonds the Bank of England is apparently selling because it has unilaterally decided to pursue a police of quantitative tightening – it’s taking back the money it created for the then-Tory government during Covid.
Because the markets are already saturated with bonds – and they’re selling them because of uncertainty about the government – this means the bonds have to be sold cheap, with high interest rates on them – and that pushes up the general UK interest rate.
So why doesn’t Reeves invoke the Bank of England Act 1998 and tell the Bank to stop selling these bonds because it is not in the national interest to do so at this time?
I’ve been waiting for an answer to this. I may be waiting for some time to come.
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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