Reeves’s ‘reckless spending’ slammed as UK borrowing costs spike | Politics | News
Rachel Reeves’ spending hits all-time high (Image: Getty)
Robert Jenrick took aim at Rachel Reeves’ “reckless spending” after Britain’s long-term borrowing costs hit their highest level since 1998. This was due to rising inflation and political uncertainty ahead of Thursday’s local elections. The yield on 30-year U.K. government bonds, also known as Gilts, rose 0.14 point to 5.798% on Tuesday afternoon, reaching a 28-year high.
Reform UK Treasury spokesman Robert Jenrick said: “Rachel Reeves is spending eye-watering amounts of taxpayers’ money just to pay off the nation’s debts. This year alone she is expected to spend a whopping £110bn on debt interest, and that figure is rising every day.”
“As the Labor Party descends into disarray, hard-working Brits are paying the price. Instead of Rachel Reeves’ money being spent on their priorities, the money is being diverted to cover the costs of her reckless spending. The British public is paying the price for Labour’s reckless spending and borrowing decisions.”
Gilt yields move in the opposite direction to bond prices, meaning their prices fall when yields rise. Rising yields on these bonds mean it costs governments more to borrow from financial markets.
Read more: Labor MPs plan to oust Starmer within hours of Thursday’s election results
The yield on 10-year bonds also rose 0.15 percentage points to 5.122%, but remains below recent highs reported last month. The yield on the 10-year U.S. Treasury was flat on Tuesday but has risen steadily in recent weeks.
Gilt yields have risen on rising predictions that the conflict in Iran will lead to higher inflation due to rising energy costs, which is likely to prompt the Bank of England to raise interest rates.
UK government borrowing fell to a three-year low of £132bn by March, but analysts predict borrowing will worsen throughout the year if inflation picks up.
The Iran war effectively closed the Strait of Hormuz, affecting the world’s supply of oil and liquid natural gas, causing energy prices to skyrocket.
Mr Jenrick added: “Labor MPs are now arguing about who should replace Keir Starmer and what jobs they should take, rather than cutting people’s bills and getting rid of wasteful spending. “They have stopped serving the country and are more interested in serving themselves.
“The country deserves so much better. The billions of pounds we spend on debt interest is money that could be spent on much-needed new hospitals, ships or prisons. I urge Express readers on Thursday to vote Reform UK and send a message to Keir Starmer that we will not put up with this disaster any longer.”
Traders in the city now expect the central bank to vote on at least two rate hikes in the coming months, although the bank maintained the current rate at 3.75% last week.
The rise in gilt yields means the Government will face higher debt interest costs, putting more pressure on the Chancellor’s spending powers.
It comes as there is significant pressure on Prime Minister Sir Keir Starmer ahead of UK local elections.
Sterling remained broadly stable at 1.353 against the dollar on Tuesday.
