Sound and fury

UK protests: Student unrest in London — including an opportunistic assault on a car carrying the Prince of Wales — looks worse than it is. The UK government has jumped an important hurdle by winning a controversial vote on the plans to hike university fees that triggered the protests. Its fiscal reforms remain intact — and so too does creditor confidence.

While the higher education reforms aren’t going to wipe out the UK’s deficit on their own, they are symbolic of the coalition’s commitment to fixing the country’s finances. The government had plenty to lose, given how interest on its debt could have risen. Without the determined financial discipline shown, Britain could have become bracketed with the euro zone periphery. But having so far assuaged gilt market fears with fiscal prudence, the UK has been able to preserve more of the public spending so admired by malcontents.

 

True, the yield on gilts has risen in recent weeks. But that is because economic growth is looking more promising and inflation is stirring. Fundamental measures of bond value had become overcooked too.

Real risks remain, of course. Fissures in the Conservative/Liberal Democrat coalition, uncovered by recent disagreements, may widen. University fees have become a totem for the LibDems, the junior partner, far more than any other belt-tightening imperatives. Future cuts to the welfare budget may be badly received by Left-leaning politicians in the coalition. But disaffected welfare malcontents are unlikely to challenge the government in the manner of the students. The costs of welfare cuts are more likely to come in increases in social deprivation and crime.

Meanwhile, it’s hard to see the LibDems collapsing the coalition. They will be upset if a planned referendum on voting reform — opposed by Conservatives — doesn’t go their way. But having tasted power, they are unlikely to walk out of government for that, or any other issue.

The coalition sports bruises following the fight over tuition fees. But there should be no doubt that the government is still standing. And having landed its punches, the leadership is better equipped for the long slog to budgetary balance.