British government bonds fell substantially on Wednesday, following Chancellor Rachel Reeves’ sad appearance in parliament the day after the government backtracked on its welfare reforms, reigniting concerns about the country’s finances.
Reeves was attending Prime Minister’s Questions on Wednesday, after the government decided to reduce plans to drastically slash payments. The dramatic drop in British assets instantly drew parallels to Liz Truss’ brief premiership nearly three years ago, which was destroyed by a bond market selloff.
Investors are keeping an eye on Reeves’ situation after the British government reversed welfare reforms, resulting in the plans no longer saving taxpayers any money and destroying the margin on which Britain relies to achieve its fiscal constraints.
According to Gordon Shannon, portfolio manager at TwentyFour Asset Management, the U-turn on welfare reform “signals that the Labour Party is a lot less concerned about what the gilt market thinks.”
“I would have thought it was seared into politicians’ memories what happened to Liz Truss.” The yield on the 10-year government bond, or gilt, increased by as high as 22 basis points on the day, to 4.681%, as investors abandoned British debt. It then rebounded significantly, reaching 4.60
Also Read:
An Agreement to Waive Entrance Visa Restrictions Between the UAE and Pakistan has Been Signed
About Author
