Complaint
Asked to explain the bond market, the economist Lord O’Neill replied “It is a collection of people that help governments finance their spending needs...There’s only a couple of ways governments can get money. One is from taxpayers and the other is by borrowing”. Two listeners complained this was misleading, because it did not reflect the fact that governments create new money when they spend, meaning that borrowing in the bond market is a political choice, not a financial necessity. The ECU considered the complaint in the light of the BBC’s editorial standards of accuracy.
Outcome
While recognising that the view put forward by the complainants represented a valid theoretical account of the financing of government, the ECU noted that in practice it was subject to constraints of market confidence which provided a strong deterrent to sustained government spending unfunded by either taxation or borrowing. Lord O’Neill spoke in the same terms as are used by HM Treasury, the Debt Management Office and the Office for Budget Responsibility, and the ECU considered this met the standard of accuracy appropriate for a discussion which aimed to explain the impact of the bond market on the current government’s room for manoeuvre, rather than to explore alternative theories of government financing.
Not upheld