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

Dominic Raab wrote in his letter of resignation…

“This is, at its heart, a matter of public trust,” he told the PM, concluding: “I cannot reconcile the terms of the proposed deal with the promises we made to the country in our manifesto at the last election… I believe that the regulatory regime proposed for Northern Ireland presents a very real threat to the integrity of the United Kingdom. I cannot support an indefinite backstop arrangement, where the EU holds a veto over our ability to exit…”

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