Osborne's debt reduction strategy has saved £16.5 billion in interest payments
By Joseph Willits
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Yesterday, UK 10 year bond yields were at a historic low of 2.106%. Today's Financial Times stated that "the government’s fiscal austerity programme has reassured investors that the UK is unlikely to lose its triple A credit rating".
Figures from the Office for Budget Responsibility suggest that since this year's March Budget, gilt yields have allowed debt interest payments to be reduced by £16.5 billion over the next 5 years, working out at roughly £1,000 per working UK family.
Deputy Chairman of the Conservative Party, Michael Fallon has said that the opposition's Plan B of "more spending, more borrowing and more debt is a plan for bankruptcy". Balls' "dangerous addiction to borrowing and debt" he said, "would destroy our hard-won ‘safe haven’ status and put our country back in the financial markets’ firing line". In a suggestion that Labour was failing to grasp the severity of the situation, Fallon said that “fiscal credibility is not an abstract concept – it saves jobs, helps businesses and has cut homeowners’ mortgage bills".
Writing at the Spectator, Fraser Nelson has said:
"If I were George Osborne, I’d spin this as a standing ovation from the markets for my deficit reduction plan."
"Our present rock-bottom gilt yields are utterly unsustainable. They are in mega-bubble territory, as are US Treasuries and German bunds. As the bubble bursts in other economies, and investors pull out, nations deemed as temporary safe havens are benefiting from lower yields. The cost of borrowing will eventually have to rise – and that will not be a bad thing, as artificially low gilt yields are crippling pension funds and destroying the value of many savers’ pension pots. But at least the government has been given some breathing space."