Ethan Ilzetzki on the International Implications of Fed Policy, Business Cycle Theory, and the UK Crisis
Macro Musings with David Beckworth
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Is the UK Going to Default on Its Sovereign Debt?
There are two ways the UK could possibly fail to repay its sovereign debt. One of them, very unlikely, would be that an outright announces a default on its sovereign debt or tries to restructure it. The second way that could happen is that the UK would either explicitly inflate away its debt and just nudge the central bank a little bit more to have higher inflation. But there is no indication that bond investors were worried about the UK government or the central bank inflating away the debt.
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