“Even if the stock market looks to be shrugging, the debt markets look to be pleased, judging by how the yield on the 10-year Gilt, or Government bond, has fallen back below 1.50% today, well below February’s 1.65% high.
“The Office for Budget Responsibility’s minor cuts to its estimates for inflation for 2018-19 and 2019-20, to 1.8% and 1.9%, may help a little on this front, too, also giving the Bank of England breathing space when it comes to its latest interest rate decision next Thursday.
“All of this helps anyone with a mortgage, at least indirectly, so neither the Chancellor’s long-term debt-reduction policy nor his statement today should be taken lightly.
“The healthier the nation’s finances are, the more cheaply the Government can borrow (as lenders will be more confident of ultimately getting their money back) – and the interest rate at which the Government can borrow that forms the base of the calculation that sets the cost of mortgages.
“Anyone with a home loan may therefore get some knock-on benefits from today’s statement - providing the OBR is correct in its assessment of inflation and an unexpected economic downturn does not blow the budget deficit reduction forecasts off course.
“That is perhaps the main danger to the Chancellor’s debt reduction and spending plans. The UK has already generated eight straight years of GDP growth since 2010 and the OBR is predicting five more. Even if their forecasts of 1.3% to 1.5% a year are hardly rip-roaring that implies an usually long economic upturn and one that is still reliant on cheap debt and Bank of England support to keep it going.”