The party has no idea how the financial system works. When markets don\u2019t do what they want, they lash out like a sulky child smashing up a toy.<\/p>\n
The left has always been hostile to free markets. They see them as the final barrier blocking their dream of building a socialist utopia. In truth, markets are more like a reality check. They set limits, showing governments what they can and cannot do.<\/p>\n
The bond market is the most crucial of all. This is where governments raise the cash to fund their spending.<\/p>\n
It\u2019s dominated by heavyweight investors such as pension funds, who buy government bonds to match their liabilities.<\/p>\n
Labour loathes it, because it\u2019s the one thing stopping Rachel Reeves<\/a> from borrowing and splurging billions.<\/p>\n We should thank the bond market for holding the line. But Labour loathes it. With Keir Starmer<\/a> and Rachel Reeves<\/a> flailing, the party is losing its collective mind.<\/p>\n Andy Burnham, Mayor of Manchester, reckons that’s his chance. Yesterday, he used an interview with the New Statesman to launch his leadership pitch, branding the PM \u201cdivisive\u201d.<\/p>\n Burnham believes he’d make a better PM<\/a>, and plenty of Labour MPs agree.<\/p>\n Yet in a single sentence, Burnham has exposed his economic illiteracy. Or rather, fiscal insanity.<\/p>\n Burnham\u2019s interview was a pitch to restless Labour MPs and activists. He knows his audience and reckons they\u2019ll swallow anything. Unless he actually believes what he\u2019s saying. Which is terrifying.<\/p>\n Plenty on the left now rail against bond investors. Burnham echoed their frustration, declaring: \u201cWe\u2019ve got to get beyond this thing of being in hock to the bond markets.\u201d<\/p>\n He wants to borrow an extra \u00a340billion to build council housing. That\u2019s a crowd-pleaser in Labour circles, but there\u2019s a problem.<\/p>\n The UK will borrow at least \u00a3150billion this year. On current trends, that could hit \u00a3200billion. At the same time, the UK must refinance another \u00a3150billion of existing debt that\u2019s coming due.<\/p>\n Adding Burnham\u2019s \u00a340billion on top would push the system to breaking point and beyond. It\u2019s a crazy proposal.<\/p>\n The bond market doesn’t trust us. It already charges us more interest than any other Western country. This is called the “moron premium”, because bond investors think our politicians are morons<\/a>. Just wait till they see Andy Burnham.<\/p>\n There\u2019s a good reason why we\u2019re \u201cin hock\u201d to the bond markets. Because we’re relying on them to keep the lights on.<\/p>\n The UK stopped living within its means years ago. We borrow too much, spend too much, tax too much and grow too slowly. None of that is the fault of the bond market.<\/p>\n Burnham is doing what every feckless debtor does when the bills mount up, and blaming the creditors.<\/p>\n He\u2019s selling MPs and activists the comforting fiction that Britain could borrow and spend whatever it wants if only the bond market wasn\u2019t so mean.<\/p>\n In reality, it\u2019s the bond market that keeps us on life support.<\/p>\n Far from freeing us, Burnham\u2019s plan would make Britain more dependent on global investors than ever.<\/p>\n In one sentence, he’s shown how Labour is lost in a fantasy world. The market is the last guardrail keeping us within our means. As it did with Liz Truss.<\/p>\n The last thing Keir Starmer<\/a> and Rachel Reeves<\/a> should do is stick two fingers up at the bond market. Then we\u2019ll discover what it\u2019s really like to be in hock to bond investors. It won\u2019t be pretty.<\/p>\n","protected":false},"excerpt":{"rendered":"The party has no idea how the financial system works. When markets don\u2019t do what they want, they…\n","protected":false},"author":2,"featured_media":450057,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,4],"tags":[8916,7770,807,12,619,16,15],"class_list":{"0":"post-450056","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"category-united-kingdom","9":"tag-andy-burnham","10":"tag-bond-market","11":"tag-keir-starmer","12":"tag-news","13":"tag-rachel-reeves","14":"tag-uk","15":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115264220387029004","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/450056","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=450056"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/450056\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/450057"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=450056"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=450056"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=450056"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}