Rachel Reeves is facing a significant challenge as the UK’s borrowing costs reach a 27-year high following a reshuffle by Sir Keir Starmer. The cost of government borrowing has surged due to changes in key economic advisors made by the Prime Minister. The Chancellor is now responsible for managing the budget as yields on 30-year UK gilts climbed to a peak of 5.64% on Monday.
Gilts are government bonds typically bought by large institutions like pension funds, allowing the government to raise money by borrowing from investors, who receive an IOU for repayment later. These bonds are generally considered safe investments since governments typically honor their debts. However, the yield on these gilts represents the return investors receive over the bond’s duration. Treasury minister James Murray has taken over as Treasury chief secretary, effectively serving as Ms. Reeves’s deputy, while Dan Tomlinson, the MP for Chipping Barnet, has stepped in as Treasury exchequer secretary.
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Credit to : UK BULLETIN