The Bank of Japan has just done what Threadneedle Street has lacked the nerve to do for years: it has slammed the brakes on easy money. Rates are now at their highest in three decades, and the message is clear. The era of cheap debt, of zombie companies and government overspending, is over.
Meanwhile, the British Treasury sits on its hands, watching the pound drift and inflation linger. Fiscal discipline is not a luxury. It is the price of credibility.
If the Chancellor does not follow suit, expect capital flight and a gilt market that punishes hesitation. The markets have no sentiment, only arithmetic. Japan understands this.
Does Britain?
