Investor interest in UK government bonds waned dramatically at the latest debt auction, as mounting political instability and looming borrowing plans spooked markets. Yields on 10- and 30-year gilts jumped in reaction.
Analysts attribute the softness to expectations of higher deficits under the incoming administration and fears over economic policy direction. Financial commentators warned that borrowing costs for the government could rise significantly.
Reform UK, led by Nigel Farage, called on the Bank of England to pause bond issuance and lower interest on reserves, further complicating the outlook. Meanwhile, vulnerabilities in the UK’s manufacturing sector — including production at Jaguar Land Rover hitting historic lows — add to the stress in the economy.
