UK Gilt Yields Drop as Record Budget Surplus Boosts Sentiment

2026-02-20 10:26 By Joana Ferreira 1 min. read

UK 10-year gilt yields fell toward 4.35%, marking their lowest level since mid-January, following the release of a record public sector surplus for January.

Net borrowing posted a £30.4 billion surplus, well above forecasts and the highest monthly surplus since records began in 1993, exceeding projections from the Office for Budget Responsibility.

The strong fiscal data, alongside a relatively dovish Bank of England meeting, weak employment figures, and benign inflation, helped calm markets and temporarily overshadow political concerns.

Investors also digested robust economic indicators: the S&P Global UK PMI showed private-sector activity in February expanded at the fastest pace since April 2024, led by strong manufacturing and services growth.

Retail sales in January surprised to the upside, rising 1.8% month-on-month including fuel and 2% excluding fuel.



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