Well, it seems the sky hasn’t fallen in after all. Despite all the hysterical predictions over the weekend that, due to our failure to elect a majority government, we would get our arses spanked as soon as the markets opened, the FTSE and the pound (against the dollar) have risen this morning. The reason for this is that a deal was done to shore up Greece which, in turn, shores up the Euro which, in turn, restores confidence in sovereign debt – all sovereign debt, including that of the UK.
I have been getting up early quite a lot over past few weeks, so I get to see World Business Report before BBC World cuts over to BBC1 at 6am. The shift in focus between the two channels is fascinating to watch. From the global perspective of BBC World, the UK is an interesting side-show. This morning, the real news was about how Asian markets reacted to the EU’s rescue package. Only after 6am did the horse-trading between the Tories and Lib-Dems become the main headline.
“Markets are watching anxiously,” said a news reporter. He was right but they weren’t watching the Tories and the Lib-Dems, they were watching what happened in Brussels last night and the reaction of Asia this morning. It may be a blow to the egos of British politicians but their schemes and speeches were not all that important in the eyes of the rest of the world. It was the EU deal that influenced the way the markets would react this morning, even for those countries outside the Euro. The cost of insuring UK government debt fell last night not because of anything David Cameron, Nick Clegg or Gordon Brown did but because of a deal that was negotiated in Brussels.