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There's been a huge row over Labour's tax and spending plans
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this week.
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The Conservatives say they'll blow a £1.2tn hole
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in the nation's finances, creating a tax bombshell.
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Labour dismisses this as nonsense.
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It says higher tax will pay for day-to-day spending
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on things like more nurses and doctors,
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and it will only borrow for higher capital spending.
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Some £55bn a year for transport, broadband, green energy,
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hospitals and schools.
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That's a lot more, more than doubling current public sector
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investment plans.
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It's also a lot higher than the Conservatives' promise.
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Labour plans would raise government investment back
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to levels last seen in the 1970s.
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That's over 4 per cent of national income,
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raising some big questions about whether Britain
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can finance its borrowing, and whether it'll be well spent.
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We sought to find out how investors
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and British government debt might react.
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The Chancellor, Sajid Javid, says they'll run scared.
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He was talking about Labour creating an economic crisis
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within months.
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But on the financing question, the government bond market
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doesn't appear terrified.
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The UK government can borrow for 10 years
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at a cost of only 0.75 per cent, a little up from a month ago
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but still extremely low.
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We also talked to many people in the markets.
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The main view was that investors would be willing to finance
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Labour or the Tory plans very cheaply.
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For example, Mark Dowding, chief investment officer
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at BlueBay Asset Management, summed up the view saying,
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there was a once in a generation opportunity
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for a big fiscal expansion.
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But you shouldn't think that because bond investors are
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prepared to fund big spending, they think it's a good idea.
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Many we spoke to thought pushing so much money out of the door
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so quickly would lead to waste and bad investments.
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The bond market isn't full of vigilantes at the moment,
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ready to push politicians around.
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They're happy to finance Labour's plans,
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even if they think the proposals won't work.
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And there's a simple reason why.
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They believe even if the plans are nuts,
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they'll still be repaid, with at least some interest.
