Rachel Reeves says she has ‘iron grip’ on finances as borrowing costs surge
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Treasury issues rare second statement in two days after sell-off leaves 10-year bonds at highest level since 2008. Rachel Reeves took the rare step of issuing a public statement for the second successive day on Wednesday, insisting she has an “iron grip” on the public finances, as the sell-off in bond markets intensified.
The cost of 10-year government borrowing hit its highest level since the global financial crisis in 2008, jeopardising the chancellor’s chances of meeting her self-imposed fiscal rules. A Treasury spokesperson said: “No one should be under any doubt that meeting the fiscal rules is non-negotiable and the government will have an iron grip on the public finances.”.
They added that the chancellor would “leave no stone unturned in her determination to deliver economic growth and fight for working people”. Analysts have warned that by pushing up government borrowing costs, the market moves could wipe out the £9.9bn headroom Reeves left herself against the fiscal rules in October’s budget. However, the spokesperson insisted this was “pure speculation”.
Investors blamed Wednesday’s renewed jump in bond yields – which move in the opposite direction to prices – on concerns about the government’s tax and spending plans, and anaemic economic growth. The pound also fell, in another sign of anxiety. Sterling fell to its lowest level against the dollar since April last year and the domestically focused FTSE 250 stock index fell to an eight-month low.
