UK Now Safer Haven than Germany

Over at the “evidence based” LeftFootFoward blog they have an opinion piece claiming “Osborne’s ‘safe haven’ view is delusional”. Let’s examine the evidence, starting with Sovereign Credit Default Swap rates:

Exhibit A

CDS rates reflect the cost of insuring against the risk of default. UK gilts have got their edge back, German government bunds are now seen by international markets as a higher risk than British gilts. So Osborne is right to claim that Britain is seen as a safe haven, with the resultant benefit of lower cost long term borrowing. Guido’s second piece of evidence is the disparity between German and UK government borrowing rates:

Exhibit B

German 5-year borrowing rate: 1.41%

UK 5-year borrowing rate: 1.29%

UK rates are lower, though not as low as that other traditional European safe haven, Switzerland, where interest rates have turned negative. This means that effectively you have to pay the bank to deposit Swiss francs. Below are last night’s closing money market rates for Swiss LIBOR futures, usually quoted as 100 minus the rate, they are now confusingly trading above 100 meaning that money market rates are now negative. Not something Guido has ever seen before…


Elsewhere in Europe the banking system teeters on the edge of disaster. Anecdotally there are tales of Italians driving their Alfa Romeos across the border to convert their paper euros into hard currency in Switzerland. To paraphrase Sarah Palin: How is that monetary unity thing working out for europhiles?




Tip offs: 0709 284 0531
team@Order-order.com

Quote of the Day

Noel Gallagher on Brexit:

“In England, the Brexit thing, it’s like, I can’t believe there’s so much noise about it… It was put to the people as a vote, the people voted. That’s democracy. F***ing get over it.”

Sponsors

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.
Jez “Doesn’t Do Dinners” Jez “Doesn’t Do Dinners”
New Tory Slogan: Building a Britain Fit for The Future New Tory Slogan: Building a Britain Fit for The Future
Unilad Deleted From Facebook Unilad Deleted From Facebook
Royal Mail’s Tweets Deliver Truth About Nationalisation Royal Mail’s Tweets Deliver Truth About Nationalisation
Disgraced Gay Times Editor Is Labour Member Disgraced Gay Times Editor Is Labour Member
Yasmin Alibhai-Brown: “I’d Rather Be Mugabe Than May” Yasmin Alibhai-Brown: “I’d Rather Be Mugabe Than May”
Corbynista Rulebook Saves Lansman’s NEC Dream Corbynista Rulebook Saves Lansman’s NEC Dream
70 Million Reasons BuzzFeed Won’t Go Public 70 Million Reasons BuzzFeed Won’t Go Public
Sun Coffee Run to Broadcasting House Sun Coffee Run to Broadcasting House
Teething Problems for Salmond’s RT Show Teething Problems for Salmond’s RT Show
Hammond to Deliver “Real Action” on Housing in Budget Hammond to Deliver “Real Action” on Housing in Budget
Dods Shard Offices Infested With Maggots Dods Shard Offices Infested With Maggots
Nelson’s Back Nelson’s Back
Nasreen Khan Resigns Nasreen Khan Resigns
Young Liberals Condemn Cable For Defending Rennard Young Liberals Condemn Cable For Defending Rennard
Brexodus Was Bogus Brexodus Was Bogus
McDonnell Now Sure There Won’t Be a Run on The Pound McDonnell Now Sure There Won’t Be a Run on The Pound
Shadow Minister: “I Don’t Know” Why Corbyn Hasn’t Suspended Dent Coad Shadow Minister: “I Don’t Know” Why Corbyn Hasn’t Suspended Dent Coad
Byline Outs Russian Troll But It’s a Security Guard from Glasgow Byline Outs Russian Troll But It’s a Security Guard from Glasgow
Emma Dent Coad on “Fake Bake”, “Homies” and “Bluds” Emma Dent Coad on “Fake Bake”, “Homies” and “Bluds”