Can Britain escape the “moron risk premium”?

of being exciting for all the wrong reasons, Britain’s bond market is at last settling down. All it took was an emergency bond-buying programme from the central bank, the defenestration of a chancellor, the installation of a sensible successor, the humiliation of a prime minister and the shredding of a vast unfunded tax-cutting package that set the fiasco in motion. At the height of the chaos, Britain’s five-year borrowing costs were higher than those of Italy and Greece, two countries that have difficult relationships with their lenders. Although the markets are now calmer, the country’s sovereign bonds, or “gilts”, still trade at much higher yields than they did before the self-inflicted blow. Dario Perkins of Lombard, an investment-research firm, has dubbed this a “moron risk premium”. What does the premium mean for Jeremy Hunt, the new chancellor, as he seeks to restore order to the country’s finances?