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In the UK this morning, we get the latest data on public sector net borrowing. This gives a snapshot of government spending.
In the first seven months of this financial year, borrowing was 10% higher than last year. That’s because while tax receipts were higher this year, government spending was higher still.
Given that the government wants to turn on the spending taps next year, the press might pay more attention to this release than usual. But ultimately, from a market impact perspective, it’s not particularly consequential in these days of low interest rates.
Markets may one day start to care about high levels of government borrowing a lot more than they do now. If inflation picks up, it will become an issue. But there’s little sign of the so-called “bond vigilantes” returning to haunt markets quite yet.
That’s all from us here at Money Minute for this year. We’ll return on Monday 6 January. In the meantime, have a wonderful Christmas and a very happy New Year.