Cazenove's Jeffrey: The gilt edge is rubbing off

GILTS

Over the past year, the British government has had the luxury of funding its still very high borrowing requirement by issuing gilts at exceptionally low yields.

That is largely because other countries, most obviously those in ‘peripheral’ Europe, are seen to be much higher risk than the UK. Even the French government is paying 1% more for 10-year borrowing, while the German government is paying only 0.3% less. Of course the UK authorities have pledged themselves to austerity with regard to public sector finances and it is undoubtedly helpful the UK's banking crisis emerged earlier than those elsewhere. So, the mea culpa strategy has paid off. At the same time, it is interesting to speculate what would have happened had the Monetary Policy Com...