UK Government Bond Yields Rise Amid Fiscal Measures Announcement

Investing.com – The yields on UK government bonds rose Thursday after Chancellor Rachel Reeves stated her willingness to announce new measures to ensure compliance with fiscal rules in March.

At 06:20 ET (11:20 GMT), the yield on benchmark 10-year UK government bonds, known as gilts, rose 6 basis points to 4.70%. Prices and yields have an inverse relationship.

In an interview with The Wall Street Journal during the World Economic Forum’s annual meeting in Davos, Reeves indicated that she might announce new measures during the budget update scheduled for March 26.

Reeves initially set forth new fiscal rules in October, which included a commitment to borrow exclusively for investment purposes and not to cover day-to-day expenses by the fiscal year ending March 2030.

“We will find ways to ensure we continue to meet those fiscal rules,” Reeves told WSJ Editor-in-Chief Emma Tucker. “I’ll set out the measures that are necessary, if they are necessary.”

However, data released earlier this week indicated that Britain faced a larger-than-expected budget deficit in December, with a notable sell-off in British government bonds increasing debt interest costs.

According to the Office for National Statistics, public sector net borrowing was £17.8 billion ($22 billion) in December, over 10 billion pounds higher than the same month last year.