Just how significant was the failure today of the sale of government bonds?
It is the first time that it has happened since 1995 and many will see it partly as a reaction to Mervyn King's comments yesterday.
The U.K. failed to find enough buyers for £1.75 billion of bonds coming up short by around £100m.
Bonds are the way that the government will fund the public expenditure deficit over the next two years and hopes to sell £146b this year and £147b next year.
According to Bill Jones, professor of politics at Liverpool Hope University. Brown’s “whole strategy is based on borrowing and now he can’t get anyone to buy his gilts. This means the prospect of going cap in hand to the IMF hovers increasingly into view.”
Part of the reason could also be laid at the door of yesterday's inflation figures as potential investors were wary of buying debt that would not mature for four decades.
Ominous signs?
2 comments:
what were the terms and interest rates?
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