Her budgetary problems Britain rebuild the UK markets again, as the investors They are becoming increasingly skeptical of the government’s ability to maintain its economic order without harming the economy.
Pressures have led to warnings by economists that Britain may eventually need rescue from the International Monetary Fund (IMF). This may be an exaggeration, but what is real right now is the behavior of investors, who sell long -term bonds of the United Kingdom and push yields to the highest levels of the century.
State bonds were fluctuated today Wednesday (3.9.2025), with long -term returns remaining close to higher levels of the last decades.
This means that more money is committed to public debt payments, limiting the limited fiscal space of Finance Minister Rachel Rivs and making difficult political choices even more difficult. Only higher interest rates have caused a £ 8 billion damage ($ 10.7 billion) from the latest budget event in March.
The memories of the 2022 crisis caused by the so -called “mini budget” of former Prime Minister Liz Trars remain strong, giving financial markets a strong veto on budgetary policy.
However, the risk for Ribs is that the actions to keep investors on its side will push the United Kingdom into a fiscal vicious cycle, where tax increases will affect demand and growth, reducing tax revenue, causing more market weakness and deeper.
Bloomberg Economics estimates that it will need up to £ 35 billion only to return to its minimum margin left itself against its main fiscal rule.
Reeves “received warning from investors in government bonds,” said Susana Strier, head of Hargreaves Lansdown’s money and purchases. “The concern is not only that state funds will not be replaced, but that they will be filled at the expense of growth, leading to a vicious circle.”
At global level, long -term bond yields have increased in some cases to levels higher than those of the last decade, as investors require higher premiums to compensate for the highest debt supply that governments have to issue to fund spending plans
In the UK, The 30 -year -old government bond rate exceeded 5.7% this week for the first time since 1998while 10 -year bonds negotiated at the highest level since January. Sterlina rose today, after the biggest fall since April yesterday.