Nuhey News

We talk about the MARKET

The UK borrowing rate is approaching the “mini-budget” crisis levels from last year

The cost of borrowing for the UK government has continued to climb amid Brexit uncertainties, with yields on 10-year government bonds, known as gilts, hitting their highest level in nearly three years. The surge clearly reflects investors’ concerns over the potential economic and financial fallout from the UK’s withdrawal from the European Union. The gilt yield has now risen to 1.5%, just 0.1% below the level it hit in August 2019 when the UK’s then-Finance Minister, Sajid Javid, delivered the emergency “mini-budget” in response to an economy slowing under the weight of Brexit uncertainty. This so-called “mini-budget” saw Javid announce a spending boost and tax cuts worth £13 billion, but the short-term impact was only temporary relief for the economy. Uncertainties remain, particularly over the ongoing Brexit process, creating instability for the pound compared to other major currencies and further contributing to rising gilt yields.