Who are the bond vigilantes and are they back?

LONDON, Jan 14 (Reuters) - High government spending and a growing need among big economies - from the United States to Britain and France - to tap bond markets to fund their outlays have shot up the list of concerns for some policymakers and investors.

This year has started with a selloff across global government bond markets, with Britain in particular caught in the crosshairs.

France's inability to enact belt-tightening measures due to political instability has also hurt its standing in financial markets. And rising U.S. Treasury yields suggests some sceptism among investors that a new U.S. administration will curb a high budget deficit.

No wonder talk of a return of bond vigilantes is growing.

The term, coined in the 1980s, refers to debt investors who seek to impose fiscal discipline on governments they perceive as profligate by raising their borrowing costs.

It can also apply to monetary policy. Investors can demand more compensation to lend money if they think central banks and governments are failing to contain inflation.

Higher government borrowing costs can spill over into higher lending rates for consumers and companies, putting economic and financial stability at risk if they spiral out of control.

Bond markets were placated in the 1990s as U.S. President Bill Clinton's government made balancing the budget a priority after initial spending concerns sparked a jump in Treasury yields.

In the following decades, central bank...
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