The bond market is barking

I was going to start by saying that the bond market has been the dog that – so far – hasn’t barked, but of course it has been. Whether in the form of fund managers warning that UK government debt is riskier than juggling with chainsaws, or credit-rating agencies trying to persuade us that they’re still worth listening to despite their minor mistakes over securitised sub-prime mortgages, or a Chancellor and PM who want to create a sense of emergency, there have been plenty of yaps and growls warning that the cost of public borrowing is about to shoot up.

But the bark has been worse than the bite.

This handy chart in today’s FT shows that UK government borrowing costs have changed very little relative to Germany and the USA since before the credit crunch – and in absolute terms, they’re down. This is despite our surging deficit, the end of quantitative easing, a period of political uncertainty, the resignation of whatever that guy’s name was, and the recent turmoil in Europe that Nick Clegg claims has converted him into a high-speed cutter.

Past performance is not necessarily a guide to future performance, but one does suspect that there’s just a teensy bit of scaremongering going on here.