UK gilt yields rise, reducing fiscal headroom for Chancellor Healey

Nigel Green, CEO of deVere Group, has warned that the United Kingdom is experiencing a slow-motion version of the 2022 mini-budget crisis. This financial pressure comes as gilt yields rise, with the 10-year yield reaching approximately 5.25%, its highest level since 2008, and the 30-year yield hitting 5.89% earlier this month.

These rising borrowing costs are significantly impacting the fiscal position of Chancellor John Healey ahead of his first Budget on October 28. The increase in yields has reportedly reduced estimated fiscal headroom from approximately £26bn to £13.8bn. Green noted that the market is effectively “writing the first draft” of the Budget, as rising debt interest costs shrink the available buffer for new spending or tax adjustments.