Monday Morning Reckoning
I don’t often get to read The Washington Post, but a friend sent me the 21 July 2026 edition last week which featured an editorial on Britain’s new Prime Minister, Andy Burnham. Right at the end was a sentence that stopped me in my tracks:
“But the bond market also gets a vote.”
It’s one of those deceptively simple observations that explains far more about politics than many election speeches ever do.
What does it mean?
Winning an election gives a government a mandate. It does not give it unlimited money.
If a government wants to expand public spending, invest in infrastructure or reform public services, it can only fund so much through taxes. Every country eventually reaches the limits of what its taxpayers can afford. Beyond that, governments have to borrow.
In Britain that borrowing is done by issuing government bonds, known as gilts.
This is where the bond market comes in.
The investors who buy those bonds—pension funds, insurers, banks and global investment funds—make their own judgement about a government’s plans. If they believe the reforms will produce stronger economic growth and healthier public finances, they are prepared to lend at reasonable interest rates.
If they don’t, they demand a higher return for taking on the risk.
That matters enormously because higher bond yields mean higher borrowing costs. Suddenly more tax revenue goes towards paying interest instead of funding schools, hospitals, transport or other priorities. Governments then find themselves forced to scale back their ambitions or raise taxes further.
In effect, financial markets can veto policies without casting a single ballot.
Britain’s challenge is that economic growth has been disappointingly weak for years. Without stronger growth, tax revenues struggle to keep pace with rising spending commitments, making investors increasingly cautious about lending more money cheaply.
It becomes a vicious circle. Weak growth pushes borrowing costs higher. Higher borrowing costs leave less money available to invest in the economy. That, in turn, makes stronger growth even harder to achieve.
That single sentence from The Washington Post captured all of this in just eight words.
The bond market also gets a vote.
It is a lesson that extends well beyond Britain.
South Africa faces exactly the same reality. Every promise of higher public spending, new infrastructure, expanded social programmes or state support eventually runs into the same question: will investors continue to finance the government’s debt at affordable interest rates?
This matters in South Africa too. The UK remains one of our largest trading partners, and movements in the pound influence everything from imports and investment decisions to the spending power of South Africans travelling or doing business abroad.
Politicians may win elections.
But the bond market still gets a vote.
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