The Treasury can't sell gilts during the Olympics because no traders are going to work

The Olympics' reverse Midas touch strikes again.

The Financial Times reports that the Government is suspending its weekly auctions of Treasury gilts for a four-week period between mid-July and mid-August over fears that "too many bond traders will be working from home – or not at all – during the Olympics."

Norma Cohen writes:

A spokesman for the DMO confirmed that the prospect of so few gilts traders being at their desks with trading screens switched on had caused it to take the unusual step of rescheduling auctions.

Such thin staffing raises the prospect of a "sloppy" auction that could force the Exchequer to pay more to borrow. "Why take operational risk when you don’t have to?" the DMO spokesman said.

The two lines which are expected to be unusable during the Games are the Central and Jubilee lines, which serve Stratford station, the main access for the Olympic stadium. They are also the main routes, respectively, to Bank and Canary Wharf stations, the two with the highest concentration of bankers. Worse, many stations used in commutes to those destinations are also expected to be affected. London Bridge station, an interchange between many commuter rail lines and the Jubilee, is expected to be "exceptionally busy" between 7 and 9:30 in the morning and 4 and 10:30 at night. Bond Street, as an interchange between the two key lines, carries warnings that it may take up to an hour to get from street level to the platforms.

Cohen adds:

The absence of new gilts auctions may have a serious knock-on effect, economists said. If, as expected, the Bank of England gives the go-ahead this week for another round of gilts purchases to help boost the economy, it may have to slow these down because of the Olympic effect.

Buying gilts in a market where no new securities are being issued could distort interest rates in unpredictable ways, economists warned.

The Olympics' reverse Midas touch continues.

The Olympic stadium and the Orbit thing. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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Nicola Sturgeon is betting on Brexit becoming real before autumn 2018

Second independence referendum plans have been delayed but not ruled out.

Three months after announcing plans for a second independence referendum, and 19 days after losing a third of her Scottish National Party MPs, Scotland’s First Minister Nicola Sturgeon booted the prospect of a second independence referendum into the heather. 

In a statement at Holyrood, Sturgeon said she felt her responsibility as First Minister “is to build as much unity and consensus as possible” and that she had consulted “a broad spectrum of voices” on independence.

She said she had noted a “commonality” among the views of the majority, who were neither strongly pro or anti-independence, but “worry about the uncertainty of Brexit and worry about the clarity of what it means”. Some “just want a break from making political decisions”.

This, she said had led her to the conclusion that there should be a referendum reset. Nevertheless: "It remains my view and the position of this government that at the end of this Brexit process the Scottish people should have a choice about the future of our country." 

This "choice", she suggested, was likely to be in autumn 2018 – the same time floated by SNP insiders before the initial announcement was made. 

The Scottish Lib Dem leader Willie Rennie responded: “The First Minister wishes to call a referendum at a time of her choosing. So absolutely nothing has changed." In fact, there is significance in the fact Sturgeon will no longer be pursuing the legislative process needed for a second referendum. Unlike Theresa May, say, she has not committed herself to a seemingly irreversable process.

Sturgeon’s demand for a second independence referendum was said to be partly the result of pressure from the more indy-happy wing of the party, including former First Minister Alex Salmond. The First Minister herself, whose constituency is in the former Labour stronghold of Glasgow, has been more cautious, and is keenly aware that the party can lose if it appears to be taking the electorate for granted. 

In her speech, she pledged to “put our shoulder to the wheel” in Brexit talks, and improve education and the NHS. Yet she could have ruled out a referendum altogether, and she did not. 

Sturgeon has framed this as a “choice” that is reasonable, given the uncertainties of Brexit. Yet as many of Scotland’s new Labour MPs can testify, opposition to independence on the doorstep is just as likely to come from a desire to concentrate on public services and strengthening a local community as it is attachment to a more abstract union. The SNP has now been in power for 10 years, and the fact it suffered losses in the 2017 general election reflects the perception that it is the party not only for independence, but also the party of government.

For all her talk of remaining in the single market, Sturgeon will be aware that it will be the bread-and-butter consequences of Brexit, like rising prices, and money redirected towards Northern Ireland, that will resonate on the doorstep. She will also be aware that roughly a third of SNP voters opted for Brexit

The general election result suggests discontent over local or devolved issues is currently overriding constitutional matters, whether UK-wide or across the EU. Now Brexit talks with a Tory-DUP government have started, this may change. But if it does not, Sturgeon will be heading for a collision with voter choice in the autumn of 2018. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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