UK government borrowing costs fall to lowest level since July

"In a boost for the chancellor, the yield in effect the interest rate on 10-year UK government bonds has fallen by about 0.15 percentage points this week, after briefly dipping below 4.5% early on Friday for the first time in three months. Government bond yields have tumbled across advanced economies, as investors scrambled to buy safe-haven assets amid fears over US-China trade tensions and signs of stress in the US banking system."

"However, investors said comments made by Reeves at the annual International Monetary Fund meetings in Washington DC had helped lower UK government borrowing costs after she signalled readiness to raise taxes and cut spending. The chancellor used a Guardian interview to hint that higher taxes targeted at the wealthy would be part of the story in the autumn budget next month. She also suggested in an interview with Sky News that spending cuts could be considered."

UK borrowing costs fell to their lowest since July after 10-year gilt yields dropped about 0.15 percentage points, briefly below 4.5%. Yields tumbled across advanced economies as investors sought safe havens amid US-China trade tensions and signs of stress in the US banking system. Global stocks fell and gold hit record highs after two US regional banks revealed exposure to millions of dollars of bad loans and alleged fraud. Investors said Rachel Reeves' IMF comments signalling readiness to raise taxes and consider spending cuts improved gilt market sentiment. The IFS warned bold action may be needed to plug a potential £22bn shortfall, with the OBR set to downgrade fiscal forecasts because of higher borrowing costs and weaker productivity.

Read at www.theguardian.com