I'd be interested to know more about the extent to which the gilt markets sensitivity to increased borrowing at recent fiscal events is independent from the govt. fiscal rule / OBR forecasts interplay. I.e. did gilt yields go up at the autumn budget because Reeves had little 'headroom' against the OBR forecast, or because the gilt market fundamentally reassessed UK sovereign risk.
Also, I'd be interested to hear your thoughts on how the govt. could incorporate more public sector net worth metrics in statements / if you think that is worthwhile. It strikes me that while not a silver bullet PSNW ideas are sorely neglected at the moment, considering issues like the public sector pension liability, infra investment contributing to deficits w/o being captured as assets etc. etc.
My read on October is the story was much more scale of stimulus (and thus of bond issuance, plus anxieties about more inflation-- the OBR said the measures would add ~0.4 percentage points to 2025/6 CPI from recollection).
Re PSNW: question I always find myself asking is whether the people pushing for PSNW would be doing so if it happened to narrow headroom, rather than expand it. (Somehow I doubt!) Conceptual basis is decent (and in a way it's cleaner than the current PSNFL, which is an odd halfway house that is neither a full debt concept nor a full net worth concept), but there's also something a little uncomfortable about netting something like a road, which the state could never feasibly sell, against liquid financial debt. And, smaller-deal issue, but it's so much more sensitive to data choices and given the current state of the ONS, making it that fiscally important would also be a risk.
Great article, thanks for sharing.
I'd be interested to know more about the extent to which the gilt markets sensitivity to increased borrowing at recent fiscal events is independent from the govt. fiscal rule / OBR forecasts interplay. I.e. did gilt yields go up at the autumn budget because Reeves had little 'headroom' against the OBR forecast, or because the gilt market fundamentally reassessed UK sovereign risk.
Also, I'd be interested to hear your thoughts on how the govt. could incorporate more public sector net worth metrics in statements / if you think that is worthwhile. It strikes me that while not a silver bullet PSNW ideas are sorely neglected at the moment, considering issues like the public sector pension liability, infra investment contributing to deficits w/o being captured as assets etc. etc.
Thanks
Leo
My read on October is the story was much more scale of stimulus (and thus of bond issuance, plus anxieties about more inflation-- the OBR said the measures would add ~0.4 percentage points to 2025/6 CPI from recollection).
Re PSNW: question I always find myself asking is whether the people pushing for PSNW would be doing so if it happened to narrow headroom, rather than expand it. (Somehow I doubt!) Conceptual basis is decent (and in a way it's cleaner than the current PSNFL, which is an odd halfway house that is neither a full debt concept nor a full net worth concept), but there's also something a little uncomfortable about netting something like a road, which the state could never feasibly sell, against liquid financial debt. And, smaller-deal issue, but it's so much more sensitive to data choices and given the current state of the ONS, making it that fiscally important would also be a risk.