"New analysis from the Institute for Public Policy Research (IPPR), a think tank with longstanding ties to Labour, shows gilt yields have fallen faster than those in the US and eurozone since September. The move follows a turbulent year in which UK borrowing costs climbed significantly above other G7 economies, fuelled by persistent inflation, weak growth, and speculation over the new government's tax plans."
"Earlier this year, the gap between UK and US 10-year bond yields had blown out to 1.1 percentage points; against eurozone debt, the margin was 0.6 points. On 30-year bonds the divergence was even starker, hitting 1.5 points versus US treasuries. Those differences amounted to a clear "risk premium", a financial penalty imposed on the UK for political unpredictability and concerns over fiscal credibility."
UK gilt yields have started to fall relative to US and eurozone yields since September, reversing part of a long-standing 'risk premium'. The reduction is about 0.2 percentage points more than equivalent US and eurozone yields after a year when UK borrowing costs rose due to inflation, weak growth and tax policy uncertainty. Earlier divergences reached 1.1 points against US 10-year yields and 1.5 points on 30-year bonds. The gap represented a financial penalty tied to political unpredictability and doubts about fiscal credibility. Senior Bank of England officials noted lower gilt market volatility ahead of the Budget, and IPPR highlighted that the UK's debt-to-GDP ratio is around 100%, lower than the US, Italy or Japan.
Read at Business Matters
Unable to calculate read time
Collection
[
|
...
]