November 24, 2023 - 8:00am
On Wednesday, after a month of rallying, the UK ten-year gilt bottomed at just over 4.05%. Almost instantaneously, Chancellor of the Exchequer Jeremy Hunt stood up in the House of Commons to present his Autumn Statement. In it, he delivered the news Tory backbenchers and their voters had long been awaiting: thanks to the leeway the Government had managed to deliver itself with its fiscal prudence, he would be able to start cutting taxes. Not much, admittedly, but hopefully enough for the Conservatives to enter an election claiming to be back on track.
But as Hunt was speaking, bond yields began rising. By the time he was done, they were up 10 basis points, or a tenth of a percent. The next morning the trend continued, and Thursday ended with the ten-year bond yield above 4.25%, a full 20 basis points higher than Wednesday’s trough. So whatever gains the Government may be hoping to score with its supporters, bond markets seem to be delivering a vote of no confidence.
It’s nothing like the Truss-Kwarteng meltdown of a year ago. But then, nothing could ever rival that. Last year’s ill-fated mini-budget delivered massive tax cuts and huge spending rises, all while dispensing with any accounting to the Office of Budget Responsibility and instead asking for a huge “trust us” from investors. Famously, they didn’t place much stock in the Government’s wonky accounting.
Stung by this experience, the Chancellor stayed well within the accounting limits set by the OBR. But if his ask of bond investors was considerably more modest than last year’s, there’s still an appeal for trust in the fine print of his budget, one which appears to be unsettling them. Most of the fiscal space the Government claims to have given itself results from real-term cuts to public spending it says it will make in the future, its plan being to raise much departmental spending more slowly than inflation. To make things worse, that “future” happens to be after the next election.
In effect, it’s saying it will hand out money today which it will then claw back after the election. But it’s hard to believe any government will actually deliver on these promises. Polls consistently reveal a public clamouring for improvements in public services after years of austerity-induced erosion, from policing to health care. What’s more, the last round of austerity, initiated by George Osborne, followed years of Government largesse. Even at that, the policy proved deeply unpopular. In consequence, Boris Johnson campaigned for the 2019 election in no small measure on a pledge to end austerity.
It’s hard, then, to picture the Government campaigning on a platform of further degrading public services. It talks of raising public-sector productivity, but doesn’t really say how it will do this. As the Institute of Fiscal Studies put it, this “does not feel like a recipe for good management of the public finances”.
After the relief that greeted the return to boring stability last year, as Rishi Sunak entered Downing Street, bond investors may now be judging that this might not be a bankable government after all. If so, that could cause it headaches in the New Year. The narrow wiggle space the Government has left itself means that even modest changes in forecasts could derail its plans. If bond yields continue to rise, the plans may come due for revision before the election arrives, forcing the Government to water down its pledges.
So keep an eye on the bond markets. Things could yet get rocky.
John Rapley is an author and academic who divides his time between London, Johannesburg and Ottawa. His books include Why Empires Fall: Rome, America and the Future of the West (with Peter Heather, Penguin, 2023) and Twilight of the Money Gods: Economics as a religion (Simon & Schuster, 2017).
jarapley
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SubscribeBeing a child means every option is on the table.
That’s the joy of childhood.
Being an adult means having to make life choices based on your needs and wants tempered by your abilities.
You can’t have everything.
The David anecdote is a perfect example of transitioning from childhood dreams and expectations to hard adult choices.
David is now happy because he is satisfying his own personal priority list.
IMO, millenials, or whatever the current tag is for the younger generation, are really just suffering from stunted emotional growth.
I don’t blame them entirely because they’ve been lead to believe, mostly by doting parents and coffee bar communists, that not only can you have it all, the inability to tick every life goal box somehow represents a failure of the system.
You aren’t young and naive – you’re a victim. (I believe the neo-liberal corporate kleptocracy is the Voldemort du jour)
But don’t worry, we will rise up and fix it.
They aren’t victims.
They’re just not adults yet.
‘David, a youth campaigner in his twenties who moved to London after university to help found a new charity,’
Talk about a non-job. No sympathy whatsoever. Ah…upon reading further I see that David saw sense and got out of London. But we do not learn whether or not he left the non-jobbing behind.
Founding a charity seems quite impressive to me. Do please provide a list of real jobs that have your approval.
Law, accountancy, medicine, the armed services, the church, engineer, banker, plumber, electrician, fire brigade, police, sales & marketing, retail, manufacture, import & export, farming, university lecturer, university admin, gym instructor, sport, sport admin, archeologist, lab technician, actor, dancer, modelling, musician, grocer, delivery driver, haulier, shelf stacker … need I continue?
Thanks for your list of jobs. They’re all great in my eyes. It doesn’t really address my point though which was why the previous contributor was so dismissive of someone setting up a charity a ‘non-job’.
Not sure much has fundamentally changed- I graduated from a London University & started a professional training contract in 1979-for the first 5/6 years I lived in the outskirts of London in a room in a shared house whilst I run up a sizeable amount of debt.Eventually my earning increased but I was 30+ before I could buy a property and thatw as only because my employer lent me the deposit.
During a career in IT my Golden rule was never to look for a job inside the M25, no matter how much it paid. Although I occasionally had the misfortune to go into London for a meeting. In a lot of ways I’m an anywhere person but considered London to be a no-way-I’m-working-there place.
Is there anything smugger than those having left London for the Shires or small town life looking down in Millennials?
To paraphrase this nasty article: “Look at us and how clever and talented we are to have left the rat race. We have book clubs and artisan crafts and an excess of talent – and we don’t have coronavirus the way you city souls do. How dare Millennials be so arrogant as to sleep on sofas and commute long distances for no money.”
Should we all upsticks to the country and write columns for Unherd?
It seems to me everyday we find new ways to classify people, open verus closed, millenials versus genX, anywheres versus somewheres. In our ever finer dichotomy of society we are not valuing the individual, but resorting to a lazy and dishonest mental short-cut to classify them and dismiss them with all kinds of implied qualities (smart versus dumb, globalist versus bigoted, leavers versus remainers). We forget that individuals are infinitely more complex than these clever tags.
“The result, I argued last November, is a socially-liberal, economically aspirational graduate precariat, clinging to the big-city dream while scraping a hand-to-mouth existence in cramped, expensive shared housing.”
You’re talking about my kids. This middle-aged white conservative male thinks that millennials should go en masse to parks and, while scrupulously observing social distancing protocols, sunbathe to their hearts’ content, and tell any copidiots who harass them to keep their far king distance.
Not everyone is a nimby
Always lived in the shires as my family have for generations. Glad to say all my children do as well. Today I went to pick up my weekly supplies at the local farm shop. The whole yard was full of clearly London millenials on bikes all with those stupid helmets they wear. ignoring as they felt they had the right to all social distancing and yabbering away at each other. I live in an area where the richer ones have second homes ( or daddy does) . This puts the farm and the workers in peril and as the whole area is now under much more police surveillance puts the farmer himself under pressure he does not need. .
My small town does not want then here. Not now and not ever really.
No doubt your ‘small town’ is the beneficiary of far too generous farming subsidies? No doubt it also gleefully accepts the largesse handed out by ‘daddy’ and his pampered offspring?
Yet, both you and it remain chippy and envious. You should banish the green eyed goddess and count your blessings. The perpetual whining of the shires, most notably by such organisations as The Countryside Alliance is one of the most unattractive features of modern Britain and its chemically saturated landscape.
I think it’s s shame that a thought provoking article has elicited so many antagonistic responses. I don’t agree with everything in the article but the general thrust, identifying a clear and damaging societal split, is spot on. And I’d like to come to Boris Johnson’s defence regarding the author’s pooh-poohing of his aspirations for ‘levelling up’ the country. I think he’s referring to a general economic levelling up between our major population centres as much as between town and country but it strikes me he is on the same page as the author and deserves some credit for this ambition. Let’s hope he manages to turn it into a set of successful policies.
The English have long tended to celebrate the provincial and rural over the metropolitan. And smug metropolitan-hating parochialism and swaggering philistinism have long defined the shires, compelling many a bright young thing to escape to the big city. Some of those bright young things may return, as the provincial ‘somewhere’ is held up as a seedbed of community, meaning, the good life and authenticity against the emptiness and shallowness of city life. It is a persistent motif of a return-to-nature, back-to-basics counter culture, disenchanted with the excesses and false promises of liberal, urban civilisation. Yet can this somewhere be found in a hinterland, which is more a myth than reality? Is this ‘somewhere’ merely another car-dependent nowhere, an elevated suburbia of renovated cottages, identikit housing estates, out-or-town shopping centres, industrialised food production and farming, dingy towns, inadequate infrastructure, all repackaged by a bogus heritage culture and imported artisanal pretension? Life in the sticks may be an interesting counterpoint to frenetic, big city life, yet there needs to be some critical balance against London bashing and back-to-somewhere delusion and proselytising.
Yes, move to a small town, there’s no chance of finding small-minded, disapproving people who will never accept you as anything but a blow-in. And you won’t miss the bookshops, concerts, diverse restaurants, fashion choices and just being with other young people like yourself. It will be so easy to find a good music teacher etc. …..
why would you not be able to go to a concert just because you moved out of the city? fashion choices? everyone shops online so same choices unless you like weird clothes from Camden Market. Bookshops? Believe it or not people outside of cities also read as well, lots of towns have great independent bookshops. Same with food and believe it or not, there are young people outside of cities, shocking i know!
The best bit of moving out of London? Hell of a lot less crime, do i miss the high levels of crime and constant threat of danger? Not on your life! There is nothing trendy about the constant fear of someone pulling a knife on you, throwing acid in your face, stealing your phone/wallet/bike etc It is certainly no place to bring up a young child that is for sure.
Be trendy or be safe? No brainer for me really
I did just that; 40 years in London and finally got out. To deep rurality, but with a wonderful classical and modern music scene (and music teachers – starting right next door), lanes and barns full of artisans and creatives making all sorts of wonderful things, good food and much cheaper and less pretentious, and even bookshops. And publishers, writers, bookclubs… Amazing, there’s life out here, culture, creativity, and friendly people.