For the full story it’s worth visiting ft.com or reading page 3 of today’s newspaper. But the fascinating news from the bond markets is that investors may no longer regard British government debt as AAA - if you look at the yields they are demanding on such financial instruments. (Yields = annual fixed income as a percentage of the cost of the gilts).
Since the end of November the gap between the interest rate that Britain and Germany must pay on 10-year gilts has risen from 0.35 percentage points to 0.9.
UK gilt yields, at 4.07 per cent, have risen to higher than Italy – at 4.03 per cent – for the first time in 18 months. Italy’s S&P rating is A+ while the UK is still AAA.
Which raises the question: Do ratings agencies follow the market or create the market?
For a more sanguine point of view: guest columnist Andrew Scott argues that the US and UK “can handle decades of debt”.