Comments on: Fiscal stimulus: Does Government debt really rule it out? http://touchstoneblog.org.uk/2009/03/fiscal-stimulus-does-government-debt-really-rule-it-out/ Policy news and comment from the Trades Union Congress (TUC) Thu, 24 May 2012 08:14:05 +0000 hourly 1 By: Who pays the costs of recession? | ToUChstone blog: A public policy blog from the TUC http://touchstoneblog.org.uk/2009/03/fiscal-stimulus-does-government-debt-really-rule-it-out/comment-page-1/#comment-1793 Who pays the costs of recession? | ToUChstone blog: A public policy blog from the TUC Thu, 26 Mar 2009 15:01:49 +0000 http://www.touchstoneblog.org.uk/?p=2169#comment-1793 [...] pays the costs of recession? Posted at 4:01 pm on 26 Mar 09 by Nigel Adam has already blogged on whether Mervyn King is right to oppose a fiscal stimulus. His intervention has certainly had a [...] [...] pays the costs of recession? Posted at 4:01 pm on 26 Mar 09 by Nigel Adam has already blogged on whether Mervyn King is right to oppose a fiscal stimulus. His intervention has certainly had a [...]

]]> By: Duncan http://touchstoneblog.org.uk/2009/03/fiscal-stimulus-does-government-debt-really-rule-it-out/comment-page-1/#comment-1782 Duncan Wed, 25 Mar 2009 13:43:56 +0000 http://www.touchstoneblog.org.uk/?p=2169#comment-1782 I am very tried of various people (the Tories, much of the commentariat and now the BOE Governor) trotting out this 'treasury view'. The simple fact is that UK ten year gilts currently yield 3.35%. Borrowing at that interest cost is not going to 'bankrupt' the State. I don't especially care what level UK CDS are trading at. If the 'market' is prepared to lend to the State at less than 3.5%, then the 'market' is not concerned. A stimulus now is better for the public finances than a longer downturn. I am very tried of various people (the Tories, much of the commentariat and now the BOE Governor) trotting out this ‘treasury view’.

The simple fact is that UK ten year gilts currently yield 3.35%. Borrowing at that interest cost is not going to ‘bankrupt’ the State. I don’t especially care what level UK CDS are trading at. If the ‘market’ is prepared to lend to the State at less than 3.5%, then the ‘market’ is not concerned.

A stimulus now is better for the public finances than a longer downturn.

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