Forgive the doom-mongering, but the US, and especially the UK, may be dangerously on course for a sovereign debt crisis. Yet debt and deficits play a surprisingly minimal role in our countries’ politics. Overspending on borrowed money hardly featured in either nation’s elections of 2024.
Last week, a Labour MP hoping for Andy Burnham to challenge Keir Starmer for her party’s leadership told Times Radio that investors would see the UK as ‘the best place to be’ if only the government pursued ‘progressive policies that do speak to our communities’. She added darkly, ‘The markets will have to get into line’ – which was like brandishing a sabre at the heavens and threatening that the weather ‘will have to get into line’… or else! And when has a hedge fund manager ever opted to buy a strapped country’s bonds because its ‘progressive policies speak to its communities’? Meanwhile, conspicuously failing to get into line, in view of a Labour government’s prospective lurch further left, the yield on 30-year gilts jumped from 5.65 per cent to 5.85, the highest in 28 years. Britain had already been paying more to borrow than any other G7 country.
Why does debt and the cost of servicing it never seem to play a part in elections? I’ve theories. These stories concern numbers, and many voters are either outright innumerate or simply bored by arithmetic. Numbers aren’t easy to capture in pictures, and these days it’s video that packs a political punch. Bankrupting debt is a nonpartisan problem in partisan times; the issue scores no points for your team. The culprits behind unmanageable interest payments are many. Villains belong to both traditionally major parties and arguably include the voters themselves, making finger-pointing unsatisfying. Spending beyond one’s means produces irksomely mommy-ish, old-fashioned lessons. The over half of households that are net recipients of taxation think sovereign debt is a problem for the ‘rich’. Most of all, a debt crisis seems abstract. Few voters can conjure a picture of what happens to them personally when their government goes broke.
