The quiet side of debt: public debt management in advanced economies

Abstract

Whilst both the level and the make-up of public debt are high salience issues, the management of public debt seldom commands public attention. This study examines the quiet politics of public debt management in advanced capitalist societies, comparing debt management reforms and the everyday practice of debt management in Germany and the UK. We present evidence of two factors contributing to the political quietude around public debt management: a persistent absence of partisan contestation and conflict; and the dominance of ‘market discipline’ as an interpretative frame, which prevents changes in interest rates and debt servicing costs to be seen as the product of faulty debt management. We also find that this quietude creates a space for the coordination and cooperation between contemporary capitalist states and large dealer banks, whose capacities effectively to act within their respective domains depend on each other.

Green macrofinancial regimes

“…Under weak derisking, multiple infrastructural entanglements curtail the state's ability to force institutional capital to accept lower returns-let alone losses. The infra/structural power of private finance is hard-wired into weak derisking: governments depend on primary dealers and rating agencies to issue sovereign bonds (Rommerskirchen and van der Heide, 2023); central banks depend on shadow banking institutions to implement monetary policy (Gabor and Ban, 2016;Braun, 2020); and pension systems depend on (alternative) asset managers to deliver returns on retirement portfolios (Braun, 2022;Christophers, 2023). When one state actor attempts to impose losses-be it through central bank balance sheet decarbonization, macroprudential interventions, financial transaction taxes or the introduction of a 'dirty' taxonomy-institutional capital can easily denounce the prohibitive cost such a move would impose on private finance and, therefore, on other state actors.…”