Labour thinks its ‘market competitive’ bonds proposal will ‘tap into Captain Tom spirit’
Sir Keir Starmer’s proposal for a new UK recovery bond would be sold at “market competitive rates” and would aim to “tap into” the spirit shown by the public when supporting Captain Tom Moore last year.
Starmer unveiled two new policies today, announcing that a Labour government would give 100,000 loans to start-up businesses and create a UK bond to aid the nation’s post-Covid economic recovery.
The policies came during a speech that aimed to reveal more of the party’s economic direction under Starmer, with the opposition leader saying “for too long Labour has failed to realise that the only way to deliver social justice and equality is through a strong partnership with business”.
While Starmer gave no further details about the bonds, a Labour source told City A.M. that the bond yields would be “competitive with the market”.
Currently bond yields are at an all-time low, with 10-year bond yields at less than 1 per cent.
Before the Open newsletter: Start your day with the City View podcast and key market data
The source said that Labour’s recovery bond would be attractive to consumers, over other institution’s debt instruments, as there would be “moral element of knowing your savings are being put to use to rebuild the economy”.
“We see this as tapping into the same spirit shown by the public when Captain Tom was fundraising – there is a clear desire to be part of the national effort and support the country through this crisis,” they said.
The Labour leader said the new bond would “raise billions to invest in local communities, jobs and businesses” and “could help build the infrastructure of the future – investing in science, skills, technology and British manufacturing”.
Julian Jessop, fellow at the free market Institute of Economic Affairs think tank, said he struggled to see the point of a recovery bond.
“People can already buy gilts and National Savings, or invest in UK businesses using private vehicles,” he said.