UK Keynesianism: Change of heart

Sterling has had a miserable month. The UK currency has fallen 12% on the Bank of England’s trade-weighted index. Meanwhile, the spread on UK government credit default swaps has almost doubled – to 110bp. Peer Steinbrück has a plausible explanation for why. The German finance minister told Newsweek magazine that there had been a “breathtaking” shift “from decades of supply-side politics all the way to a crass Keynesianism”. That Britain has willingly rediscovered Keynesianism is undeniable. The ...