Amanze Chinonye
Britain’s bond market has sent a sharp warning to Chancellor Rachel Reeves, with long-term government borrowing costs climbing to levels not seen in nearly three decades.
The yield on 30-year UK government debt rose to 5.68% on Tuesday, the highest since 1998. Rising gilt yields translate into higher debt servicing costs, shrinking the Treasury’s room to fund spending pledges or tax cuts.
Join our WhatsApp Channel“The markets are making their view brutally clear,” said Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory firms. “Fiscal credibility cannot be faked. Reeves will have no choice but to deliver tough measures either tax rises, spending cuts, or both if she wants to prove Britain’s debt can fall in line with her fiscal rules.”
The warning comes as Reeves prepares her first autumn Budget next month, a defining test for Labour’s economic credibility. She has pledged to ensure that debt falls as a share of GDP within five years, but rising borrowing costs put that promise under pressure.
The surge in UK gilt yields mirrors a broader global sell-off in bonds, as investors demand higher returns amid stubborn inflation and ballooning deficits. In the United States, tax cuts and new spending plans under Donald Trump are projected to add trillions to the deficit, pushing Treasury yields higher.
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Green warned that the UK remains especially vulnerable because of its debt profile and recent history. “Investors still have the scars of the Truss-Kwarteng debacle. They will punish any hint of unfunded promises or fiscal sleight of hand,” he said.
The financial squeeze could force politically fraught choices. Welfare cuts would spark backlash, while tax increases risk undermining Labour’s political capital. Yet without credible action, analysts caution, Britain risks a market revolt that could drive up borrowing costs further, weaken sterling, and dent investor confidence.
“The Budget will be Reeves’ moment of truth,” Green said. “If she falters, the consequences will be swift and severe.”
The jitters in bonds have coincided with a flight to safe havens. Gold surged to a record $3,508 an ounce on Tuesday, while silver breached $40 for the first time since 2011. Investors, Green added, are hedging against “fiscal irresponsibility, currency weakness, and the erosion of trust in political systems.”
For Reeves, the stakes could not be higher: her credibility, Labour’s economic reputation, and Britain’s financial stability all hang in the balance.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
