At 10.30 this morning we will have the first auction of government debt this year. Gilts are ticking down* a little as the market awaits the outcome of the sale. Mandelson is being wheeled out today to say that – shock, horror – the First Lord backs government policy; emphasising spending reductions, tax increases and reducing the deficit, all to reassure the bond markets.
At the same time Alastair Darling is introducing a Fiscal Responsibility Bill, to be debated today, in the latest effort to reassure investors after Darling in 2008 scrapped rules to contain the deficit, he now repents:
“Whatever the economic circumstances, whatever the government, we need rules and objectives to govern fiscal policy… It is important we have that discipline.”
You can say that again. Spending prolifically in the credit-boom years wasn’t prudent, it was reckless fiscal madness. It was Brown’s delusion. We really need to go further and introduce a balanced budget law, forcing the government to live within its means. Today’s auction of £4 billion of gilts will cover a week of government overspending under the Brown and Balls economic plan. The reality is we need to control spending as soon as possible.
Creating spend / cut dividing lines is crass partisanship, not working in the national interest…
*Guido is short the market.