Ask not for whom the bell tolls: it tolls for the UK, as Jennifer Hughes has it…
A UK newspaper is said to have once run the headline “Fog over Channel, Continent Isolated”.
British attitudes may have changed since, but there will be some in London watching the eurozone wrangles over Greece and thanking the UK’s monetary isolation. But this would not reflect the market reality: while headlines have focused on Greece and the other weak eurozone members, investors have been steadily selling UK debt.
On Thursday this reached some milestones; 10-year gilt yields hit 15-month highs and the spread, or premium the UK pays over German borrowing costs, reached a full percentage point for the first time in four years. The UK now pays as much to borrow as Italy, considered one of the more vulnerable eurozone members and – at best – rated two notches below Britain.
