Rolling coverage of the latest economic and financial newsThe jump in UK borrowing costs in recent weeks to the highest level in many years has eaten into the ‘fiscal buffer’ which the government created to keep within its fiscal rules.That buffer was £23.6bn back in March, but some economists estimate it could have halved – even before you account for new spending pledges.Rather than risking some tax increases in the way previous governments have to just magically hit some number and keep the buffer bigger, in this instance I personally suspect it might be the wisest thing to do.The sharp weakening of appetite for French debt is a big issue for the broader euro area and the euro itself. France is the euro area’s second-largest economy — we used to call it the ‘core’, along with Germany, back during the 2012 sovereign debt crisis!So, if concerns spread, other heavily indebted members could also face higher borrowing costs, tightening financial conditions across the region. For the euro, that means weaker growth prospects and a growing risk premium. The EURUSD tanked to 1.1215 yesterday, as the market’s focus shifted from the central-bank convergence/divergence story towards the euro area sovereign debt story. Continue reading...