UK Bond Selloff amid Budget Uncertainty

2025-11-14 09:35 By Agna Gabriel 1 min. read

UK 10-year gilt yields climbed as much as 13 bps to 4.57% as investors grew concerned about the country’s fiscal sustainability following reports that Chancellor Rachel Reeves will abandon planned income-tax increases.

The decision reflects an improved fiscal outlook from the Office for Budget Responsibility.

The OBR now projects a budget shortfall of about £20 billion, down from a previous estimate of £35 billion, supported by stronger government revenues and resilient wage growth.

Reeves is still expected to raise revenue through threshold adjustments and salary-sacrifice reforms.

She had prepared two budget options, one with major tax hikes, another relying on smaller measures, and is now pursuing the latter.

The uncertainty comes amid cabinet divisions and follows recent political turmoil around Prime Minister Keir Starmer.

Markets reacted by trimming expectations for Bank of England rate cuts, pricing in a roughly 75% chance of a December move.



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