Politicians on both sides of the English Channel are about to be tested on the first rule of bond markets: There’s a big difference between borrowing lots of money in a suit and borrowing lots of money in a clown outfit and brandishing a supersized water pistol. The former is a good idea. The stability in sterling and in gilts prices in the run-up to the UK election suggests that investors are pretty sure Rachel Reeves understands this important distinction.
And step three is to maintain a certain level of respect for markets, the limits for how far they can be pushed and an understanding of what can go wrong if they short-circuit. The key here is that borrowing, in and of itself, is not necessarily a problem. More important to investors is how any borrowing is done, how it is presented and what it is for.