At approximately 1500 yesterday, Operation “Safe Haven” assured the safe passage of several thousand worried and weary bond traders into the Sterling gilt markets.

Indeed the rush of remuneration refugees happily drove down UK 10 year Government borrowing costs to their lowest levels for over 50 years.

This record low for the UK Treasury occurred on the very day that Spanish and Italian borrowing costs reached new record highs during the existence of the euro. It’s back to the borrowing costs of the peseta and lira days.

Mission accomplished, you might say. Certainly this development seems to underpin George Osborne‘s new communications mantra that Britain is a “safe haven in a storm”, that Britain is “stable”. To my occasionally cynical mind this seems to be a tacit admission that the Treasury recognises it has little to boast about so far as regards the economic numbers. The best that can be hoped for is stability. Stability is better than chaos. And if stability means austerity and that means low growth, than for the moment, so be it.

However, the metric by which “safe haven” success is being measured is severely flawed. Put simply there is little evidence that our record low in Government borrowing costs is much of a badge of honour, even as it is obviously better than Greek-style borrowing rates. The fall in those rates is much more to do with expectations of prolonged lows in Bank of England base rates well into 2012, driven by bad news about UK growth, than it is about a British safe haven. In fact, the National Institute of Economic and Social Research (NIESR) has shown why.

It has correlated these falls in Government borrowing costs with the behaviour of stock markets. Basically put, if the fall in the rates the Treasury pays was a consequence of optimism, you would expect to see it correlated with rises in the FTSE-100 (or 250 or All-Share). Between May 2010 and today this is absolutely not the case, as evidenced by today’s fall in bond rates at the same time as notable falls on stock markets.

As Jonathan Portes puts it: “We can conclude with a reasonable degree of confidence that the specific evidence cited by the Government to support its argument that its fiscal plans have improved market confidence in the UK shows nothing of the sort; if anything, the reverse. Low long-term interest rates appear to reflect economic weakness and lack of market confidence in the prospects of the UK economy, not the reverse”.

NIESR raise a further point. If low rates really were a result of safe haven flows, then you would expect sterling to strengthen. We absolutely have not seen that. If Osborne really did accomplish his now stated mission of creating a British “safe haven”, then logically expect the pound to appreciate, much as the Swiss Franc has done. And then start to worry about how exporters, manufacturers and the proclamations of a “rebalanced economy” will ever occur.

Follow @faisalislam on Twitter.