Prof Costas Milas of the University of Liverpool has challenged claims that Andy Burnham’s economic policies are unsettling financial markets, arguing that Google search activity and news coverage show no upward pressure on UK borrowing costs. In a letter responding to Aditya Chakrabortty’s article on bond vigilantes, Milas cites academic research linking online search and news to sovereign yields, but finds no evidence against Burnham.
No Market Reaction to Burnham
Milas points to Demosthenes, the ancient Athenian orator, who 2,400 years ago emphasised that a state’s reputation is key to lowering borrowing costs. However, he asserts that in practice, Burnham has not agitated markets. “Existing academic work has established an impact from online search activity and online news on sovereign yields,” Milas writes, referencing how Grexit talk raised Greek yields during the eurozone crisis. A close inspection of Google search activity and news on Burnham over the past two months confirms he has not put upward pressure on UK 10-year interest rates.
Call for Clarity on Borrowing
Despite the lack of immediate market impact, Milas advises that Burnham should explain in detail how any additional borrowing would finance growth-enhancing policies, as financial markets are watching carefully. The letter concludes by inviting readers to share their opinions.
