Friday, December 11, 2009
Cost of Insuring British Govt Debt Rises by 1000% in 2 Years
Iain Dale 12:33 PM
The Wall Street Journal reports that two years ago it cost $5,000 per year to insure $10 million of British government debt against default for three years. It now costs $52,000 to buy such insurance — and $72,000 to cover that risk for five years. That is $30,000 more than it costs to insure BP’s debt, and $50,000 more than to insure Germany’s. So the markets think it is more likely that UK plc will default than BP plc. Or McDonald’s. Or Gap.
That means the markets think Britain is three times more likely to default on its debt than Germany. And the cost of insuring our debt has risen by 1000% in two years. At least we're leading Europe on one measure...Brown Blows Another £500 Million
Iain Dale 11:50 AM
Yet again Gordon Brown has proved to be a soft touch in international negotiations.
His first priority now should be to get our public finances in order. Nothing else matters in the short term.
Friday, 11 December 2009
Irwin Steltzer has a chilling article in this week's Spectator, which shows just how much confidence has been lost in Britain's ability to repay its debt.
In his unconscious quest to lead Britain to bankruptcy, Gordon Brown has just blown another £500 million a year. This morning in Brussels he committed this country to giving poor countries £500 million a year to cushion the effects of countering climate change. This amounts to 27% of the total EU contribution, a figure the French are matching. But why are we contributing more than our fair share at a time when our debt is spiralling out of control?
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