The cost of borrowing the UK government. Spike against the background of units in the labor party

UK Prime Minister Kire Starmer appears by US President Donald Trump at the Western Midland, Britain, Thursday, May 8, 2025.

Albert Pesoli | Through Reuters

On Wednesday, the cost of borrowing the UK government on Wednesday, against the backdrop of attachment of units within the framework of the ruling labor party.

Yield on landmarks 10-year-old government bondsKnown as Gilts, was 22 basic points above at 1:33 pm in London.

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UK 10 -year -old gilded yield

Meanwhile, the British pound dropped 1% to the US dollar to trade at about $ 1.362 by 14:06 in London.

The tensions in the leadership of the Labor Party came to the head after the government’s turn for the bill on conflicting well -being. The discussion led to concessions to the rebel legislators who opposed the reduction of disability benefits, which effectively destroyed £ 5 billion, which initially provided for reforms – increasing the prospect of further tax increase in the fall.

After the adoption of the British Prime Minister Keira Starmer, the Parliament was asked if his finance minister Rachel Riviz would hold his post for the rest of his current term. Starmer rejected the question instead of pointing his finger at the opposition leader, Badenoch.

In a statement after the exchange in the parliament, the press -secretary of the Prime Minister said that the jerk “did not go anywhere”.

“She has full support for the Prime Minister,” the press secretary said. “He said it was many times, he does not need to repeat it every time the opposition leader reflects on work politicians.”

Reeves hit the stable pressure since time “Autumn budget” Treasury last fall When it has announced strict rules that restricted the government’s ability to spend or borrow.

Robert Wood, British Chief Economist in Pantheon Macroeconomics, said CNBC on Wednesday that the government’s concessions about the well -being changed “had undermined the hole in Ms. Rivz’s financial rules.”

“The market was comfortable that Ms. Reiviz would raise taxes to cover any disadvantage, but any risk that government borrowers would be more excited,” he said. “Mrs. Riviz’s future questions are raising the risks that the government has decided to change the financial rules to borrow more and not raise taxes.”

“Fiscal rules” Riviz stated that daily state expenses are funded by tax revenue, not by borrowing, and that state debt provides as a share of economic products up to 2029-30. In the spring, the Treasury had about 9.9 billion pounds of limited fiscal stocks to reach its goals, but the economic and financial outlook became more difficult with higher payments and weak payments than expected, tax receipts are approaching less economic growth forecasts.

According to an independent weather forecaster, budgetary responsibility (OBR) In March What awaits the UK will fix the growth by 1% in 2025 and 1.9% in 2026, potentially destroying the government. After participating in state expenses and hiking, enterprises are largely financing that the Reivz has encountered increasing pressure to connect the financial hole. In order to do, she faced the cost reduction, taxes or violation of her own borrowing rules, which she had previously described as “not necessary”.

Ashley Webb, the UK economist at the Capital Economics, agreed that investors saw the risks related to the possibility of leaving the Starmer’s office.

“The growth of gilded yields this morning in response to uncertainty about the future of Riva as a chancellor,” she said. “This suggests that the markets are worried that future government expenses are not provided, and the government eventually issues and borrow more.”

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