Markets Like the Change Coalition

Before the election George Osborne and many Tory leaning pundits were claiming that a coalition government would wreak havoc in financial markets.  Guido argued the opposite – that a “Change Coalition” would see gilts rocket upwards – only a government involving the Labour Party would wreak more financial havoc.

The gilt market has seen yields drop a full 50 basis points, in plain english that is the gilt market taking ½% off the ten year interest rate against which many mortgages are set.

This immediate £6 billion reduction in unfunded over-spending is seen in the City as confimation that the LibDems are fully signed up to the savage cuts to come next year.  Britain has now moved out of the P I I G S bracket of nations (Portugal, Ireland, Italy, Greece and Spain) in danger of sovereign default.* The chart above shows it all clearly, during the days when the City feared a Lib-Lab government the markets declined and once the Lib-Con government was in the bag they rallied.



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Quote of the Day

Charles Clarke says Cameron is the most successful PM for over a century…

“Under Margaret Thatcher the Conservatives gained 99 seats. They lost 211 under John Major, gained one under William Hague, quickly and wisely got rid of Ian Duncan-Smith, gained 32 under Michael Howard and have so far gained 133 under David Cameron who, to the great surprise of many (including senior Conservatives), has turned out to be the most electorally successful Tory leader since 1900.”

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