Not only that, but the emergency budget immediately after the election is the only window politically for cuts of the size the Tories say will be needed.

Let’s just remind ourselves what those are:

- making all benefits, including the retirement pension, means tested;

- a cut of one in six in public sector employment and a similar cut in public sector pensions (presumably excluding the army and police from the latter).

I’m simply not clear on Conservative economic policy in relation to government debt.

Simple really.

Since any sudden squeeze on government spending during the summer/autumn of 2010 might risk upsetting a fragile recovery
and sending us back into recession, Osborne/Cameron want to reassure everyone that any cuts in the short term will be ‘light’.

However, there is also a need to satisfy the markets that the incoming government is serious about getting the deficit down pretty soon. Failure to do so will send interest rates rocketing up.

Therefore the incoming government will have to ANNOUNCE cuts that will begin to bite on a tapered basis: not too much while the recovery still looks vulnerable; but vigourously and quickly once the recovery is secure.

Actually not so very different from what Alistair Darling would say if he didn’t have Brown/Balls on his shoulder trying to establish clear dividing lines for political reasons.

Cameron says, “We’re not talking about swingeing cuts.” I believe this to be literally true: they’re not talking about swingeing cuts.

And Osborne was going on about keeping interest rates as low as possible as being an objective, whilst also saying Labour presided over a massive increase in personal debt and we needed a new economic model.
I know nobody’s borrowing much at the moment, but I still don’t see those as very compatible. “Look, cheap money! Don’t use it though, you’ll only get into debt… Perhaps I can nudge you not to borrow…”
On the plus side, he had a much better knot in his tie than usual

A tight tail and the highest bid-to-cover ratio for eight years. It looks like those damn markets will just not conform to the Tory media narrative.

LONDON (Reuters) – Britain’s first auction since the Bank of England exhausted its 200 billion pound quantitative easing programme drew the highest bid-to-cover ratio in 8 years, more than three times the 3.75 billion pounds of bonds on offer.

Strategists had thought the sale would fare well as the bond was cheap compared with neighbouring securities on the curve, but the result surpassed expectations.

“It’s good for the market to get a post-QE auction under its belt and for it to go relatively well and be solidly received by the market,” said Moyeen Islam, strategist at Barclays Capital.

“For all the naysaysers on the gilt side, it seems to have held in relatively well.”