Parties Warned Against Debt Binge as Threat of ‘Bond Vigilantes’ Looms

Published on January 13, 2024

Politicians are warned against overspending after BlackRock said pre-election pledges might spur “bond vigilantes” into action and destabilize the financial market in the UK. While opinions are divided on whether investors will get fidgety over fiscal policy, Daniel Lacalle, chief economist at the Madrid-based investment firm Tressis and an Epoch Times contributor, said runaway government spending, when coupled with restrictive monetary policy, will increase the cost of debt servicing and perpetuate inflation. “Very loose fiscal policy in an environment of rate hikes and monetary contraction” has two negative effects, he told The Epoch Times. “On the one hand, debt service costs rise significantly. And that puts a burden on the budget in the following years,” he said....

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