UK’s higher borrowing costs compared with major countries ‘may be coming to an end’

Thinktank says Rachel Reeves’s budget had started to assure bond markets about fiscal approach

Rachel Reeves’s test from the bond markets starts now

The “premium” that the UK pays to borrow money compared with its international peers may be coming to an end as markets grow more confident about the government’s plans, a thinktank has suggested.

The Institute for Public Policy Research (IPPR) said that the chancellor Rachel Reeves’s announcement in the autumn budget that she would be more than doubling the UK’s financial headroom by 2030 from £9.9bn to £22bn had begun to assure bond markets about Labour’s fiscal approach.

Government bond yields – which is the return paid on government debt – have been increasing around the world in recent years, as a result of higher inflation, rising interest rates and countries running bigger deficits.

UK’s higher borrowing costs compared with major countries ‘may be coming to an end’

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