Dally wrote:Seems like the central plank of the government's economic policy is starting to unravel. The "safe-haven" aspect that has kept the government's borrowing costs low is showing signs of evaporating. Last quarter there was a net outflow of funds from the UK after a big inflow previously. So international investors are losing faith in the UK's prospects. That coupled with low / no growth, relatively slow progress on deficit and debt. the collapsing Euro, etc makes things look bleak. Are we heading for a Great Depression?
For most of your post the correct answer is "no shet Sherlock" but there are no signs that the interest rates on UK government bonds are going up.
In fact I will make two 'positive' predictions for the next couple of years, despite the gloom, inflation will be low and the interest rate on UK government borrowing will be low. Inflation will be low because of the absolute dearth of demand. Government bond yields will be low because long term expectations of UK interest rates are low as everyone knows we will be in the doldrums for ages and the Bank of England will keep rates at the floor, for the limited amount of good that it will do...