In this week’s IEA Podcast, IEA Director General Lord Hannan is joined by Dr Kristian Niemietz, the IEA’s Editorial Director and Head of Political Economy, and Dr Christopher Snowdon, Head of Lifestyle Economics. They discuss the sharp rise in UK borrowing costs, with ten-year gilt yields hitting their highest level since 2008, and ask when rising bond yields actually tip over into a sovereign debt crisis. The conversation covers the parallels with the 2022 mini-budget, why bond markets have become so attuned to political rhetoric, how bond markets actually work, and whether Britain and the wider world are heading for a fresh bout of inflation.
Niemietz and Snowdon also examine the causes of Britain’s economic stagnation, and challenge the argument, revived in a recent speech by Andy Burnham, that the slowdown can be traced back to Margaret Thatcher’s reforms in the 1980s. They set out why the 1980s and Major years were, by historical standards, a period of strong growth, and question what a modern “post Thatcherite” settlement actually looks like.
The discussion turns to Donald Trump’s deal securing a share of Venezuela’s oil reserves, the Netherlands’ decision to move its gold reserves from the US to the UK, and what these episodes suggest about the reliability of American alliances. They close by discussing the psychological impact of Trump’s foreign policy on the UK and its allies, the Democratic Party’s choice of presidential candidates, and whether the old guard of Reaganite conservatism looks more appealing by comparison.
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