If 2022 was a year to watch Britain through your fingers, 2023 might be one when you can slowly take your hands away
, has reassured the financial markets. The yield on ten-year government bonds stood at 3.64% on December 23rd; it was 3.50% just before Mr Kwarteng’s mini-budget.s are perennially restive. That might seem like fertile ground for plotters. But the chaos of the Johnson years and the fever dream of the Truss weeks have changed the electoral calculus. Revolutionaries no longer look like winners; moderates seem a better bet.
If this trend continues, labour-force shortages and inflationary pressures may ease a little faster than expected. That could have lots of knock-on benefits, most obviously by lowering the likely peak in the bank’s base rate and making the expected recession shallower and shorter. Lower interest rates should also reduce the government’s debt-interest costs, giving it room to make sensible changes to investment incentives or ease rows over public-sector pay.
There are lots of reasons to be sceptical about this sunnier scenario. The Tory party has already forced changes of plan on Mr Sunak over housebuilding and onshore wind farms. Pragmatism over Europe is in short supply, and requires concessions on the part of theas well as in Britain. The autumn statement sets Britain on a path of fiscal retrenchment that will be very painful, come what may.
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