There is some better news for the chancellor this week as traders feeling jittery have dashed to gilts and in so doing, have lowered the cost of borrowing for the UK (although there have been some yield increases today).
Calming down the gilt market looks like it’s actually a deliberate government strategy at the moment. Our reporting team have spoken to sources familiar with Rachel Reeves’s thinking, and it appears that she is looking to reset the narrative on the UK with the bond market, allowing her to bring down borrowing costs. If borrowing costs are lower, it will give a bit more fiscal breathing room to make political choices possible.