Dialling down the oratory from apocalyptic to pragmatic would reassure twitchy investors
” GDP performance, and last week a slender majority on the Monetary Policy Committee helped matters along with an overdue cut in interest rates.
However, circumstances beyond even the Treasury’s control might yet temper that ardent and effective vengeance. The past few days have brought ominous economic news on the international markets. Following poor US employment data on Friday, the Nikkei, FTSE and Dow Jones all took a hammering on Monday.
The recently announced legislative programme in the King’s Speech could be affected. If a recession is on the cards, then the prospect of creating additional regulations to make it riskier and more costly for employers to hire people, for example, looks unwise when the state must instead encourage the private sector to keep employees on.
However, that trend is dependent on the idea that the state you are lending to is a safe haven – somewhere reliable and stable to stash your money with the certainty of getting it back once the storm has been weathered. Investors have options as to where they choose as their destination, so they will look to the Government, and particularly the finance minister, of each major economy to see wherever sounds like the best bet.
In such a circumstance, the impetus could swiftly arise for the Chancellor to dial down her own messaging about the problems of the British state, and rein in her colleagues too.
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