End of road in sight for fiscal policies – part 2

Bond sale flops – fears are growing on the financial markets that Britain may not be able to repay the billions of pounds in debt it is amassing to rescue banks and revive the economy. The Government admitted yesterday that, for the first time since 1995, investors had been unwilling to buy the full complement of its so-called gilt-edged bonds at one of its official auctions. Gilts are the financial instrument it sells to investors to fund public spending. If future gilt sales are unsuccessful, it could be devastating for Gordon Brown because he might have to scale back his spending plans.

In our view, the government’s handling of this financial crisis is misguided. Market forces mean that interest rates are going to rise sharply, despite government attempts to regulate them out of existence.
Daily Telegraph article