UK borrowing costs jump as uncertainty over PM Starmer's future continues
UK ten-year gilt yields rose almost 20 basis points in a single session to a two-year high. Investors are unsettled by the continued resignation calls directed at Prime Minister Keir Starmer. Sterling also lost ground against the dollar.
The yield on the UK ten-year gilt climbed to 4.82% on Tuesday, the highest closing level in two years. The thirty-year gilt yield reached 5.21%. Sterling weakened to 1.21 against the US dollar over the session.
Internal tensions within the Labour cabinet and weekend statements by Home Secretary Yvette Cooper and Foreign Secretary David Lammy deepened the political uncertainty. A government spokesperson confirmed Chancellor Rachel Reeves will deliver a budget update next week.
Market analysts now project the public-sector borrowing requirement could exceed thirty billion pounds over the next three months. Bank of England Governor Andrew Bailey said the asset purchase programme could be reactivated if conditions warrant. Investors are watching a Labour parliamentary party meeting due Tuesday evening.
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