Overview
- Gilt yields jumped to multi-decade highs on Wednesday, pushing 10-year yields above 5.2 percent and raising the cost of UK government borrowing.
- Bond traders warned that unclear funding plans could trigger a repeat of the 2022 market dislocation if the government does not show how it will pay for new commitments.
- Prime Minister Andy Burnham has refused to rule out higher borrowing or tax rises as options as he defends spending promises in the Commons.
- Senior figures and commentators have pointed to capital gains and wealth measures as politically feasible revenue sources while urging savings in welfare and other large programmes.
- Chancellor John Healey now faces pressure to find roughly £14 billion of measures ahead of the October 28 Budget with the OBR and market reaction set to determine the credibility of any plan.