By GB News (Politics) | Created at 2025-01-09 05:00:50 | Updated at 2025-01-09 17:45:40
12 hours ago
The Treasury has reportedly been forced to intervene to stabilise financial markets as Government borrowing costs surged to their highest level since the 2008 financial crisis.
The yield on 10-year Government bonds climbed to 4.825 per cent on Wednesday, marking the highest level in over 16 years.
A Treasury spokesman 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.
"UK debt is the second lowest in the G7 and only the [Office for Budget Responsibility's] forecast can accurately predict how much headroom the government has - anything else is pure speculation.
Chancellor of the Exchequer Rachel Reeves poses outside 11 Downing Street, London, with her ministerial red box and members of her Treasury team, before delivering her Budget in the Houses of Parliament
PA
"Kick-starting economic growth is the number one mission of this Government as we deliver on our Plan for Change.
"Over the coming weeks and months, the Chancellor will leave no stone unturned in her determination to deliver economic growth and fight for working people."
The intervention came as analysts warned the recent market movements could wipe out the £9.9billion fiscal headroom Reeves had secured in October's Budget and the pound fell to its lowest level against the dollar since April 2024, trading at $1.232.
Brad Bechtel, global head of foreign exchange at Jefferies, warned the UK was experiencing a "micro version" of the 2022 bond market meltdown seen during Liz Truss's mini-Budget.
"UK gilts continue to melt down... we are spilling further and further into fiscal emergency territory," he said.
Kathleen Brooks, research director at XTB, said: "The UK is looking like an outlier and is in the sights of the bond vigilantes."
British debt costs have now reached 1.4 percentage points higher than those of Greece.
The FTSE 250 index dropped by 2 per cent, marking its largest single-day decline since last August.
Andrew Griffith, shadow business secretary, branded the Treasury intervention "extraordinary".
He said: "The Treasury would normally stick pins under their nails rather than make any public comment.
"So it shows a degree of real concern. In my experience, it is exceptionally rare for the Treasury in this way to make that sort of comment.
"It is a classic of its genre, which is all it does is publicise the fact that the markets are right to be concerned."
The Chancellor will respond to the Office for Budget Responsibility's new economic forecast in the House of Commons on March 26.
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