Gilt Market Woes Mask Bigger Threat: Far-Right Rise in Europe
The UK's gilt market has been making headlines lately due to high borrowing costs and yields. However, according to an observer, this situation is not as dire as it seems.
The observer notes that in 1976, the Labour government of Denis Healey was forced to go to the International Monetary Fund (IMF) for a loan because no one in the financial markets would lend to them. In contrast, current UK Chancellor John Healey faces high borrowing costs, but the market is still strong.
The observer attributes this difference to the global bond market being disrupted by factors such as the US's wild increase in borrowing under the Trump administration and inflationary impacts from the attack on Iran. The UK's domestic inflation rate of around 3% a year pales in comparison to the 25% reached during the 1976 crisis.
The observer also highlights that despite concerns about inflation, the UK economy has shown resilience to global shocks. However, a more disturbing development is the rise of far-right politics, particularly the Alternative für Deutschland (AfD) party's gain in Saxony-Anhalt.