Tuesday, 29 November 2011

Italian interest rates up, UK borrowing up where is UKIP?

Osborne's latest budget called the Autumn statement now admits that UK gilt issuance in this fiscal year will rise to £178.9 bn from the £167.5bn forecast in the budget 6 months previously. That is a £11.4 bn jump in 6 months. The bond market's reaction will be interesting to say the least.

Reuters reports that .Rome had to offer a record 7.89 percent yield to sell 3-year bonds, a huge leap from the 4.93 percent it paid in late October, and 7.56 percent for 10-year bonds, compared with 6.06 percent at that time.

These borrowing costs were above the levels at which Greece, Ireland and Portugal applied for international bailouts, but European stocks and bonds rallied in apparent relief at the strong demand, with the maximum 7.5 billion euros of Italian debt sold.
The unknown is who bought the debt. I suspect it was bought by French & German banks acting under pressure from their governments. These banks will very quickly sell the debt on to the ECB to add to what by now must be at least a  €250 bn pile of Eurobonds it already has. I was amused to see Rumpy and Barroso with Obama yesterday with complaints they had got the wrong Europeans. Where was Frumpy? Surely she would not miss such a chance to do her Xmas shopping.

Merkel has them by the balls. She is squeezing hard and will continue to do so until she gets the Treaty changes she wants consolidating her power over Club Med. She has her towel on the pool lounger and she is not shifting it yet. She is playing a very tough game as her electoral survival depends on it.

I was amused by the Mary Riddell peace in today's DT saying, "This will be a terrible week for the Tories, but does the Opposition have the wit to capitalise?"

This is exactly the question I have been putting to Farage's EUKIP this last year. It has been a horrendous year for the Eurozone. Does EUKIP have the wit to capitalise on their misfortunes?  No is the resounding answer. Yes UKIP is up to 8% in the polls but at such a low level the margin of error is larger than the usual 2% for a party with around 30% of the poll. I opine the reasons for the increase in UKIP support is purely domestic reflecting dis-satisfaction with the Con Lib coalition from disgruntled Tories. Farage and EUKIP do not have the ability to connect Eurozone cock up to UK malaise in UK voter's minds. They are second rate politicians and will continue to miss open goals in the best tradition of Tranmere Rovers.


John Page said...

Sad that the main anti-EU party keeps itself irrelevant, but unsurprising to us former members.

Eric Edmond said...

Its a deliberate policy to secure Farage's seat in the Lords. The man is besotted with the aristocracy, old and newly minted