Growing the economy by shrinking it first is a high-risk political strategy
Under Liz Truss’s mercifully short-lived premiership, the yield on British government bonds surged last September – a penalty described as a “moron risk premium” that markets imposed on her reckless plan for a tax giveaway to the rich. Now it appears that the morons are back: yields on gilts have exceeded the levels they reached last year, and are higher than at any point since the 2008 global financial crisis.
The reason is that, although workers are having a tough time in the current cost of living crisis, it’s not tough enough for the City’s liking. In this topsy-turvy world, it’s bad news that unemployment fell and pay growth accelerated to a record high. Never mind that prices are rising at a faster rate than wages, investors are taking their cue from the governor of the Bank of England, Andrew Bailey.
