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UK Borrowing Costs
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By *otMe66Man 2 days ago
Terra Firma |
Inevitable, and what I’ve been saying since the budget.
The cherry on the top will come in 5 - 6 years time when the student loans need paying back that contain higher tuition fees and hike in guilt yields the government borrow the loans against, against the RPI students pay back at. |
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"Hit a 27 year high today. The extra interest payments will wipe out almost all of Rachel from Accounts tax rises, meaning more are on the way in 2025.
Surely this isn't sustainable? "
Indeed. And it's beyond recovery by any political party. It transcends politics entirely.
Regardless of who's driven the car for the past 10, 20, 30 or more years, the car is now unstoppable, going 100 mph, and about 1 inch from the Armco barrier.
Sure, various parties may have ideas to slow it down a few mph, but there's not much difference hitting the barrier at 100mph than there is at 97 mph.
I fear only one thing can avert this now and it's not pleasant. |
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Borrowing costs and gilts are higher than Liz Truss's mini-budget'
No market reaction.
Some might say this suggests the budget was cover for market manipulation in order to force her out in favour of money-man Rishi. |
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"Borrowing costs and gilts are higher than Liz Truss's mini-budget'
No market reaction.
Some might say this suggests the budget was cover for market manipulation in order to force her out in favour of money-man Rishi."
Wasn’t it because she was suggesting increased borrowing to pay for tax cuts? |
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In the face of reduced economic performance, higher inflation, higher unemployment and a likely recession
Business confidence index down last four months, reduced lending to businesses and lower investment
This chancer of the exchequer is no economist |
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"Borrowing costs and gilts are higher than Liz Truss's mini-budget'
No market reaction.
Some might say this suggests the budget was cover for market manipulation in order to force her out in favour of money-man Rishi."
Totaly false. The 10 year gilt yield under Truss maxed at 5
.14%. Which market are you referring to when you talk about "market reaction"? Just prior to ths budget, £/US$ was trading at 1.35...tonight 1.24 though largely unmoved in the same period against the Euro. |
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Not false at all. This is the current state of play:
UK’s long-term borrowing costs at highest level since 1998, wiping out chancellor’s fiscal headroom + raising prospect of more tax rises this year to stay within fiscal rules.
Investors sold UK government bonds today, driving yields on 30-year gilts by 0.08 percentage points to 5.25%, above level hit by Liz Truss mini-budget in 2022 + highest in 27 years.
Borrowing costs on more commonly issued 10-year gilts climbed to a 14-month high of 4.68%. |
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"Not false at all. This is the current state of play:
UK’s long-term borrowing costs at highest level since 1998, wiping out chancellor’s fiscal headroom + raising prospect of more tax rises this year to stay within fiscal rules.
Investors sold UK government bonds today, driving yields on 30-year gilts by 0.08 percentage points to 5.25%, above level hit by Liz Truss mini-budget in 2022 + highest in 27 years.
Borrowing costs on more commonly issued 10-year gilts climbed to a 14-month high of 4.68%."
I think we're on the same page but you did write "no market reaction". Clearly the markets are reacting.
As for the "so what?" reaction, heaven help us from Welsh innumeracy. |
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By *lfasoCouple 16 hours ago
South East |
"Not false at all. This is the current state of play:
UK’s long-term borrowing costs at highest level since 1998, wiping out chancellor’s fiscal headroom + raising prospect of more tax rises this year to stay within fiscal rules.
Investors sold UK government bonds today, driving yields on 30-year gilts by 0.08 percentage points to 5.25%, above level hit by Liz Truss mini-budget in 2022 + highest in 27 years.
Borrowing costs on more commonly issued 10-year gilts climbed to a 14-month high of 4.68%."
Trading above 4.8% today. Highest level since Labour were last in Government. |
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"Hit a 27 year high today. The extra interest payments will wipe out almost all of Rachel from Accounts tax rises, meaning more are on the way in 2025.
Surely this isn't sustainable? "
BBC report says the extra needed in interest payments due to this rise could make the government fail its own key economic pledge around borrowing limits. But is this the new limit after they changed how borrowing levels are calculated which is much higher than before? Has she really reached that inflated limit already |
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By *otMe66Man 10 hours ago
Terra Firma |
"Hit a 27 year high today. The extra interest payments will wipe out almost all of Rachel from Accounts tax rises, meaning more are on the way in 2025.
Surely this isn't sustainable?
BBC report says the extra needed in interest payments due to this rise could make the government fail its own key economic pledge around borrowing limits. But is this the new limit after they changed how borrowing levels are calculated which is much higher than before? Has she really reached that inflated limit already"
It was always understood that Reeves budget didn’t add up, leaving her with two options: borrowing more or raising taxes.
Labour repeatedly insisted there would be no tax rises, which led many to expect increased borrowing. This expectation played right into to rising gilt yields outcome. However, as the pressure mounted due to the rise in gilt yields, Reeves and Starmer began to backtrack, saying they can’t rule out tax rises.
They’ve effectively backed themselves into a corner through economic naivety, trying to navigate contradictory promises...
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"Hit a 27 year high today. The extra interest payments will wipe out almost all of Rachel from Accounts tax rises, meaning more are on the way in 2025.
Surely this isn't sustainable?
BBC report says the extra needed in interest payments due to this rise could make the government fail its own key economic pledge around borrowing limits. But is this the new limit after they changed how borrowing levels are calculated which is much higher than before? Has she really reached that inflated limit already
It was always understood that Reeves budget didn’t add up, leaving her with two options: borrowing more or raising taxes.
Labour repeatedly insisted there would be no tax rises, which led many to expect increased borrowing. This expectation played right into to rising gilt yields outcome. However, as the pressure mounted due to the rise in gilt yields, Reeves and Starmer began to backtrack, saying they can’t rule out tax rises.
They’ve effectively backed themselves into a corner through economic naivety, trying to navigate contradictory promises...
"
Grim news indeed and just been reading that the removal if winter fuel allowance will not raise what the government thought and could instead actually cost more than it saves. Pensioners that never claimed pension credit before, are now doing so in droves. Once accepted it opens up eligibility to several other benifits costing the government much more than previously which was not in the calculations declared |
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By *otMe66Man 10 hours ago
Terra Firma |
"Hit a 27 year high today. The extra interest payments will wipe out almost all of Rachel from Accounts tax rises, meaning more are on the way in 2025.
Surely this isn't sustainable?
BBC report says the extra needed in interest payments due to this rise could make the government fail its own key economic pledge around borrowing limits. But is this the new limit after they changed how borrowing levels are calculated which is much higher than before? Has she really reached that inflated limit already
It was always understood that Reeves budget didn’t add up, leaving her with two options: borrowing more or raising taxes.
Labour repeatedly insisted there would be no tax rises, which led many to expect increased borrowing. This expectation played right into to rising gilt yields outcome. However, as the pressure mounted due to the rise in gilt yields, Reeves and Starmer began to backtrack, saying they can’t rule out tax rises.
They’ve effectively backed themselves into a corner through economic naivety, trying to navigate contradictory promises...
Grim news indeed and just been reading that the removal if winter fuel allowance will not raise what the government thought and could instead actually cost more than it saves. Pensioners that never claimed pension credit before, are now doing so in droves. Once accepted it opens up eligibility to several other benifits costing the government much more than previously which was not in the calculations declared"
we wont talk about the extra 500 people they needed to employ to manage the surge in claims.
I have a feeling that encouraging pensioners to claim for pension credit was a get out of jail card when they were put under pressure, it backfired when it was pointed out the forms were complex and not user friendly, followed by an unexpected uptake in claims. why do I think that, if they had this as part of the plan, like they said, surely the staff would have been in place before the announcement and the paperwork would have already been streamlined....
I'm not sure how many feet they have left to shoot. |
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Reeves plans will be dependant on Trump
All of her speeches and statements will be for the birds when Trump takes office. It will be an America first policy and no matter which way uk jumps, the financial implications of huge tariffs either affecting us or our neighbours will be severe. Uk exported £188bn (22% of uk exports) to the USA in 2024. Soon USA policies will focus on the USA domestic economic development not ‘special relationships’.
Uk exports to the EU market are circa £350bn (reported 42% of uk exports).
Only five new trade deals done since Brexit, so far Labour have delivered lower and negative growth, higher inflation, higher unemployment, slower pace of interest rate falls, reduced business confidence/lending/investment. Notable that the new government is very quiet and out of ideas on the economy.
Reeves will have to unpick her budget fast to prevent further damage |
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"Reeves plans will be dependant on Trump
All of her speeches and statements will be for the birds when Trump takes office. It will be an America first policy and no matter which way uk jumps, the financial implications of huge tariffs either affecting us or our neighbours will be severe. Uk exported £188bn (22% of uk exports) to the USA in 2024. Soon USA policies will focus on the USA domestic economic development not ‘special relationships’.
Uk exports to the EU market are circa £350bn (reported 42% of uk exports).
Only five new trade deals done since Brexit, so far Labour have delivered lower and negative growth, higher inflation, higher unemployment, slower pace of interest rate falls, reduced business confidence/lending/investment. Notable that the new government is very quiet and out of ideas on the economy.
Reeves will have to unpick her budget fast to prevent further damage "
Its clear Reeves has to go. The question is when Starmer realises this. |
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"
It’s clear Reeves has to go. The question is when Starmer realises this."
YouTuber (retired accountant of national
House builder) explaining new housing starts are lower for past three consecutive months. ONS will confirm this in February.
Rayners plans pissed on too. |
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"The yield on the 30-year gilt touched 5.25 per cent on Tuesday, pushing past a previous peak in October 2023 and eclipsing levels reached during the height of the market fallout from Liz Truss’s ill-fated “mini” Budget the previous year."
Will Reeves/Starmer be forced to quit the way Kwarteng/Truss were? |
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""The yield on the 30-year gilt touched 5.25 per cent on Tuesday, pushing past a previous peak in October 2023 and eclipsing levels reached during the height of the market fallout from Liz Truss’s ill-fated “mini” Budget the previous year."
Will Reeves/Starmer be forced to quit the way Kwarteng/Truss were?"
Borrowing costs will be dwarfed by the impact of recession, unemployment is already rising, more businesses closing than opening. Consumer credit balances are rising (+9.7% on 2023) reflecting the state of household finances. |
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One of the biggest red flags in macro markets - and a sign of fiscal un-anchoring - is yields up and currency down. This is happening again in the UK (the last proper time we saw this was Q4 '22... after *that* Budget). Looks ominous |
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""The yield on the 30-year gilt touched 5.25 per cent on Tuesday, pushing past a previous peak in October 2023 and eclipsing levels reached during the height of the market fallout from Liz Truss’s ill-fated “mini” Budget the previous year."
Will Reeves/Starmer be forced to quit the way Kwarteng/Truss were?
Borrowing costs will be dwarfed by the impact of recession, unemployment is already rising, more businesses closing than opening. Consumer credit balances are rising (+9.7% on 2023) reflecting the state of household finances. "
And of course the Employer NI rises not even in place yet.  |
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"One of the biggest red flags in macro markets - and a sign of fiscal un-anchoring - is yields up and currency down. This is happening again in the UK (the last proper time we saw this was Q4 '22... after *that* Budget). Looks ominous"
That graph on bbc bond explainer article does not look good
Uk borrowing @5.3%
USA 4.9%
Germany 2.7% |
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"In the face of reduced economic performance, higher inflation, higher unemployment and a likely recession
Business confidence index down last four months, reduced lending to businesses and lower investment
This chancer of the exchequer is no economist "
Rachel Reeves has a MSc in Philosophy, Politics and Economics from Oxford University and a Msc from the London School of Economics. She also worked in the Bank of England. She looks like an economist to me. |
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