Chancellor Sajid Javid has revealed that Boris’ dog Dilyn has been getting very friendly with Saj’s Bailey, who lives in Number 11. When asked by the Sun’s Tom Newton Dunn if this was ‘like master like dog’, Saj responded with a cheeky ‘no comment’…
— Sun Politics (@SunPolitics) December 6, 2019
This is not true. The debt will continue to rise in cash terms unless and until the Tories close the deficit.
Sajid’s wriggle is that they plan to have debt fall as a proportion of GDP as above, which he neglected to explain. The debt to GDP ratio has more than doubled since 2008 and has flatlined since Osborne. Sajid is not certain to hold that line as Boris plans a spending splurge…
Today is economy day, Shadow Chancellor McDonnell will be up later promising to spend hundreds of billions of borrowed money and raised taxes. Sajid Javid has just promised to increase spending by hundreds of billions in borrowed money. No mention of that fiscal deficit the Tories promised to close in 2015.
All this borrowing will, they both claim, be financed from the sale of government gilts at the currently prevailing cheap interest rates. The market is suspicious and interest rates will inevitably rise if the market is flooded with gilts. The world’s biggest bond investment fund is Pimco, here’s what their chief investment officer for global fixed income told the FT this morning:
“The prospect of increased sales of gilts to fund more government spending makes the current high prices even less attractive. Gilt yields look too low in general. If you don’t need to own them it makes sense to be underweight”
Incidentally, the name of that chief investment officer is Andrew Balls, brother of Ed Balls. Saj knows that investors will not perpetually buy gilts at the high prices and the low yields prevailing today…
In news that would attract more attention if not for Brexit, the government is briefing that there will be no the major tax cuts despite the promises Boris made during his leadership campaign, such as raising the income threshold for lower earners and increasing the 40% tax rate threshold from £50,000. Going into an election without having delivered Brexit or tax cuts means Boris definitely won’t be running on his record as PM.
Guido has been told in explicit terms “the cuts ain’t happening“, with the Treasury instead prioritising spending on infrastructure, such as roads and hospitals. The Treasury is already weary of Boris’s spend-happy approach to government, with the policies announced at Tory conference alone totaling almost £60 billion. Government borrowing was £9.4 billion in September according to data released yesterday. The first time in 5 years that the level of borrowing has increased year-on-year in September. Total borrowing for the financial year to date stands at £40.3 billion, £7.2 billion more than in the same period last year. In comparison the revenue lost to HMRC keeping the promise Boris made to raise the higher tax threshold for the middle classes looks like mere pocket change.