LONDON (Reuters) – New Chancellor Sajid Javid is looking at how best to take advantage of record-low borrowing costs when he sets out his first budget later this year, according to an interview published late on Friday.
FILE PHOTO: Newly appointed Britain’s Chancellor of the Exchequer Sajid Javid is seen outside Downing Street in London, Britain July 25, 2019. REUTERS/Henry Nicholls
British government bond yields – which determine the cost of new borrowing – fell to a record low this week on fears of a global economic downturn, and Prime Minister Boris Johnson’s government has already promised to review existing budget rules.
“It is obvious to me that when you’ve got some of the lowest rates on government debt this country has ever seen, I wouldn’t be doing my job if I wasn’t thinking seriously about how do we use (that opportunity),” Javid, who took office last month, said in an interview for Saturday’s edition of The Times newspaper.
Javid, a former Deutsche Bank trader, said he had “concerns” about the health of the global economy following an inversion of the U.S. and British government bond yield curves, which some economists see as a signal of recession.
Many economists think Britain’s economy could contract if Johnson follows through on a threat to take the country out of the EU without a transition deal on Oct. 31 if the EU does not reopen negotiations concluded by his predecessor.
Javid said a no-deal Brexit would “require a significant economic package as a response”, including measures to boost both demand and the supply capacity of the economy, but did not give details.
Javid confirmed that he would stick to existing budget guidelines, which aim to keep annual borrowing under 2% of gross domestic product,