Unfortunately that is not the case. Interest rates will rise in the near future. The UK has already passed it's credit limit and is living on borrowed time.
There is no 'credit limit' to pass - and even if there was it is likely to be far greater than the mere 76.5% of GDP we are at now.
Japan has sustained rates of something like 200% of GDP for years and its interest rates are comparable to Britain's.
They will not remain low.
Why won't they? There is no significant reason for rates to increase - people still want to buy government bonds and bond auctions continue to be hugely oversubscribed.
The majority of government borrowing is on very long terms (on order of 30 years) which means that even if the bond vigilantes were to double the interest rates they wanted tommorow it would still take years for this to have a significant impact on the debt burden.
Yes, he has not delivered on getting Government spending back in line. I think you missed the details on the proposed cuts, which start at £25B.
He hasn't delivered because of the panic cuts in 2010 - he managed to create a second crash simply by ranting that it was going to be painful.
If he had done nothign the deficit would be almost gone by now.
The Conservative party was elected with the intention it would smash the state, the 'deficit crisis' was merely an excuse.
Cutting welfare like he proposes is almost impossible - it will reduce consumer spending by roughly £25bn which will cause a drop in tax receipts and loss of jobs which will cause welfare spending to increase.
Its basically Jevon's Paradox in reverse.
Saving money does not net save you money, or if it does it saves you far less than you might expect.
however it is not a point a view shared by those in either central Government circles nor involved in the markets.
If anyone in Government was concerned why did Osborne announce tax cuts rather than actually attempting to raise any revenue?
Taxation is actually at a relatively low percentage of GDP and continues to fall as they take the axe to a wide variety of taxes and keep hiking the Income Tax threshold.
If we are in so much trouble was has the 'triple lock' on pensions not been abandoned and a 1% rise or total freeze been implemented?
That alone would save billions every year.
Or why do the markets continue to buy long term government debt with 30 year terms and lock in very low interest rates for the entire term?
If they thought there was going to be major rate rises you would see the interest on short term bonds drop and that on long term ones begin to rise as they become undersubscribed.
Or you would see a reduction in the number of long term bonds that managed to get sold at auction.
None of these things has happened.
The scale of the problem we are facing is probably greater than that of the first round and potentially more devastating.
The first round wasn't actually that bad.
The second round created by Osborne/Cameron's rhetoric and state-smashing in 2010 has been by far the more problematic.
Anyway - enough of that.
Back on topic.
The immediate problem is that the GWML Electrification is going over budget. Either additional funds are made available to NR in order to complete the project as is, or cuts to the project, and/or other projects will have to be made. On top of that, there is a good chance that this or a future Government will have to claw-back part of the existing funding to NR in order to bring central Government expenditure under control. There are no ifs or buts about that now.
What is likely to happen is that the currently committed projects will be completed basically in full. But that there will not be another upgrade, that is not already committed, approved for a decade or more.
The political cost of cancelling upgrades while pushing through HS2 is too large.
