There’s no doubt it’s been a miserable week for the U.K. government, with Prime Minister Keir Starmer and his ministers coming under increasing pressure as investors question Britain’s fiscal, economic and political future.
A global bond market mini-meltdown on Tuesday brought the yield on the U.K.’s 30-year gilt up to a level not seen since 1998, also hitting the British pound and adding to the Treasury’s fiscal headache ahead of the Autumn Budget. And Starmer’s deputy — and housing minister — is facing calls to quit this week after she admitted underpaying tax on a second home.
Deputy PM Angela Rayner defended herself, saying she acted on expert advice when buying her seaside apartment, but that’s cold comfort as the U.K. government struggles to inspire confidence and trust in voters — with the government’s approval ratings in the doldrums — and investors.
While not alone in experiencing bond market volatility this week — with global yields rising among major economies as investors worry about the inflation trajectory, yawning budget deficits and growing debt piles — confidence in the U.K. has been dented by concerns over the country’s particulars.
Doubts have mounted over Finance Minister Rachel Reeves’ ability to balance the budget and bring down the national deficit, which hit 4.8% in 2024, as well as the country’s debt pile of around 96% of the GDP, at the last reading in July.
