UK Borrowing Costs Rising | Truss Mk2.0 ?

[ThisOldThang]

UK government borrowing costs have risen from 3.75% to 4.2% during the past month.

If there's a 'buyer's strike', as we saw with Liz Truss, inflation and interest rates could spike upwards.

We've fixed our mortgage for five years...

https://www.theguardian.com/business/2024/oct/10/labour-needs-25bn-a-year-in-tax-rises-to-rebuild-public-services-warns-ifs

Article text

The IFS said that even if the fiscal rules were changed so that debt continued to rise in the final year of the forecast, Reeves would still need tax rises to avoid spending cuts and meet her pledge to borrow only to invest.Ben Nabarro, chief UK economist at Citi – the bank responsible for the economic forecasts underpinning the IFS’s tax, spending and borrowing assumptions – said there was a risk of a “buyer’s strike”(a run on government bonds) unless Reeves made it clear any increase in investment spending would be gradual.“There is material concern in the gilt market about an unconstrained dash for investment out there,” Nabarro said. After Truss’s disastrous mini-budget two years ago “international investors are not really giving the gilt market the benefit of the doubt”, he added.Since the middle of last month, the interest rate – or yield – on 10-year UK gilts has increased from 3.75% to just below 4.2%.“If the rules are changed and there is a material risk, or the possibility is entertained that Rachel Reeves could invest something like £50bn next year, then I think it’s a conceivable risk [of a buyers’ strike],” Nabarro said.

Oh dear. It's starting.

https://www.bbc.co.uk/news/articles/c93yenv5r74o

Rachael Thieves just redefined how the debt is calculated so it's another fudge to borrow to infinity.

Inflation and interest rates are going to rise rapidly meaning the slice of government spending on servicing the debt will rise as well. We might even be approaching a debt spiral which stands a good chance of a currency collapse.

We have a three year fix. We were hoping prices would come by down by then.

I said to my husband yesterday that it was reminding me if Liz trust. He told me not to be daft. I thought, I must be overly pessimistic, but now I see that I am not the only one with an uneasy feeling.

I think if they borrow fir genuine investment, we’ll be fine. If they borrow to splash out now, we’ll be in trouble.

10 yr Gilt yields have risen slightly in response to yield rises in the USA, they are now similar to feb 24 and lower than much of 2023, these was a dip recently that lasted a few days, then went back up, which is where you get your 3,75 to 4,2 from.

The 3 year gilt is falling, so it might be worth reading up on glits etc before posting what you want to happen.

I do find it funny that Tories are now so concerned about Gilts, whilst during much of their tenure, they have been among the highest in the G7.

Germany's rates have been 1/2 what the UK s have been for many years, the USA mostly higher.

I had thought the opposite was about to happen according to BoE about a week ago

Oh dear if it goes the other way

Well if it makes you happy!

Once again, 3/10yr yields are lower now than over almost all of 2023/24.

https://tradingeconomics.com/united-kingdom/government-bond-yield

The main issue is that the economy is on a knife edge. It can respond adversely to what appear minor tweaks because its all about confidence. I suspect RR isn’t filling anyone with confidence.

Investment can be incredibly slow at generating positive returns. It can be a money pit for governments and our track record is f great . Plus it’s not dealing with our huge liabilities and overspending which are massive issues pretty much now.

This Government will be taking away from savers and won’t care about raiding pensions. Truss didn’t see it coming due to ignorance. Reeves knows what could happen but political dogma will come first. So business and savings will be hit and they won’t care. Who really wants to invest here? More are leaving than investing!

She’s obviously filling the investors of £63 billion with confidence. Facts don’t seem to have any validity on this thread though.

The mortgage article was concerning for many people.

It feels like we're being threatened with a smash and grab on all sides, affecting children, house owners, savers. Vehicle owners. The elderly. Business owners (thus employees). Pension holders.

Few will be spared if she goes for the lot.

err, is the prediction not that interest rate will come down and mortgages likewise?? I don’t feel even remotely “threatened”, how absolutely ridiculous.

Reeves is not going to redefine debt. Interest rates will come down and you've fixed for 5 years anyway so don't worry too much.

Inflation is the lowest it’s been for three years. The only thing I feel threatened with is improved public services.

What, the baseless scaremongering?

Inflation has dropped, rates are dropping overall. Lots has been happening in the background to improve relations with trading partners. Move away from mainstream media and it looks a lot more positive overall.