Does our new Chancellor mean what he says? In a speech to Treasury staff on Tuesday, John Healey said his priority was fiscal discipline, adding: ‘Because fiscal credibility is the bedrock of economic stability and national security.’
Well, let’s hope so and for three powerful reasons: the first two obvious, the third less so.
First, he has to hold down the cost of funding the national debt. Interest payments this year will be at least £110billion, making it the Government’s third-largest outgoing after social services (including pensions) and the NHS.
The yield on ten-year gilts – Government bonds – is now over 5 per cent, which aside from a brief period in November last year is the highest since 2008.
That’s partly a reaction to global factors, in particular pressure on inflation after the latest surge in oil and gas prices – US rates have gone up too.
