UK government borrowing costs fall to lowest level since July
The UK government’s borrowing costs have fallen to the lowest level since July as Rachel Reeves considers tax rises and spending cuts before next month’s autumn budget.In a boost for the chancellor, the yield – in effect the interest rate – on 10-year UK government bonds has fallen by about 0.15 percentage points this week, after briefly dipping below 4.5% early on Friday for the first time in three months.Government bond yields have tumbled across advanced economies, as investors scrambled to buy safe-haven assets amid fears over US-China trade tensions and signs of stress in the US banking system.
Global stock markets fell sharply and gold hit a record high after two US regional banks said they had been exposed to millions of dollars of bad loans and alleged fraud.However, investors said comments made by Reeves at the annual International Monetary Fund meetings in Washington DC had helped lower UK government borrowing costs after she signalled readiness to raise taxes and cut spending.The chancellor used a Guardian interview to hint that higher taxes targeted at the wealthy would be “part of the story” in the autumn budget next month.She also suggested in an interview with Sky News that spending cuts could be considered.Mark Dowding, the chief investment officer at RBC BlueBay Asset Management, said: “Comments from the ruling Labour party that everything remains on the table and that spending cuts are still being considered alongside tax hikes also helped to improve gilt market sentiment, taking 10-year yields towards the lower end of the range they have traded since March this year.
”On Thursday, the Institute for Fiscal Studies (IFS) said Reeves would be required to take “bold” action to plug a potential £22bn shortfall in the government finances.The chancellor is expected to face a sharp downgrade in the forecasts for the government finances from the Office for Budget Responsibility, owing to elevated borrowing costs, weaker productivity forecasts and welfare U-turns.Simon French, the chief economist at Panmure Liberum, said it was unclear whether the reduction in borrowing costs in recent months would influence the OBR forecasts.The independent Treasury watchdog will use a snapshot of bond market yields over a 10-day period in October before the budget on 26 November to underpin its forecasts for borrowing costs.“UK 10-year Gilt below 4.
5% this AM for the first time since early July.Considerable question marks over whether this move will (or should) be captured by the OBR,” French wrote in a post on X.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe UK’s borrowing costs still remain higher than for other G7 economies, he added.The IFS said Reeves should consider spending cuts to placate jitters in financial markets, in its annual “green budget” report prepared alongside analysts at Barclays.At the launch of the report, Moyeen Islam, a fixed income strategist at Barclays Investment Bank, said City investors were looking for the chancellor to announce spending cuts to “burn a little bit of political capital” in order to show commitment to her fiscal rules.
The fall in UK government borrowing costs also comes after renewed evidence of economic weakness.Economic data released this week showed unemployment unexpectedly rose to 4.8%, wage growth dipped and the economy grew by 0.1% in August after revised figures showed it contracted by the same amount in July.Dowding said the “relatively soft” data could encourage the Bank of England to cut interest rates.
Nearly 2,000 Foreign Office jobs ‘at risk’, says PCS union
Almost 2,000 civil servants at the Foreign, Commonwealth and Development Office face the risk of redundancy, with the biggest union for government workers vowing to fight the cuts.The PCS union, which has about 200,000 members, said it had been told that 1,885 jobs at the second highest level, known as delegated grades, were “at risk”, in addition to redundancy notices that have already been issued to some senior civil servants.The union linked the cuts to the government’s decision to reduce the foreign aid budget and accused the department of failing to follow civil service protocol by putting a number on job cuts before consulting.The Foreign Office (FCDO) said it was reducing its headcount to make the department more agile, after its permanent secretary, Olly Robbins, said earlier in the year that the department planned to reduce the size of its workforce by up to 25% as part of wider civil service changes.The Cabinet Office has previously announced plans to lose tens of thousands of roles in the civil service, but most attempted cuts so far have been through not replacing staff and voluntary, rather than compulsory, redundancy programmes
Three neo-Nazis jailed for plotting terror attacks on UK mosques and synagogues
Three neo-Nazi extremists who amassed an arsenal of more than 200 weapons and were planning terrorist attacks on mosques and synagogues in England have been jailed for between eight and 11 years.Christopher Ringrose, 35, Marco Pitzettu, 26, and Brogan Stewart, 25, communicated online and formed a group with “like-minded extremists” who wanted to “go to war for their chosen cause”, a jury heard.A nine-week trial at Sheffield crown court heard how the trio idolised Hitler and the Nazis, used racist slurs, glorified mass murderers and encouraged violence against anyone deemed an enemy.The three men, who were not believed to have met in person until they appeared together in the dock, were arrested when security services believed an attack was imminent. It came after undercover officers infiltrated their online group
Ministers plan high-level visits to China despite espionage trial outcry
Ministers are pushing ahead with their reset of relations with China, including several planned high-level visits before the end of the year, despite the furore triggered by the collapse of a high-profile espionage trial.Plans have been drawn up for Jonathan Powell, the national security adviser, to travel to Beijing in November for talks before an anticipated trip by Keir Starmer next year.Bridget Phillipson, the education secretary, and Patrick Vallance, the science minister, are also expected to travel to China on government business before the end of the year.The government could yet decide to pull or postpone Powell’s November trip after he was dragged into the controversy surrounding the abandonment of charges against two men accused of spying for Beijing.A government spokesperson said: “We have long been clear that we are bringing a consistent, long-term and strategic approach to managing our relations with China, rooted in UK interests
No 10 says Badenoch’s claim PM should have intervened to stop China spy trial collapsing ‘absurd’ – as it happened
Matt Western, the Labour chair of the joint committee on national security strategy, said that his commitee met this morning and has decided to hold a formal inquiry into this.He said the chairs of the home affairs committee, the foreign affairs committee and the justice committee were among the committee’s members.He asked for an assurance that the inquiry would have access to ministers and officials.Ward said the government welcomed parliamentary scrutiny. He said he was sure witnesses would be made available to the committee
China spying case: dream job turns into nightmare for DPP Stephen Parkinson
Stephen Parkinson dreamed of being the most senior prosecutor in England and Wales before he even qualified as a barrister, but now finds himself in a situation more akin to a nightmare.As the director of public prosecutions (DPP), Parkinson is facing questions over why he felt he could not proceed with the trial of two men accused of spying for China. He said the case was dropped because prosecutors had tried and failed to obtain a witness statement from the government stating that China posed a current “threat to the national security of the UK”.But that explanation has been called into question by some senior lawyers and, perhaps more ominously for Parkinson’s job prospects, by politicians too. A government minister, Stephen Kinnock, declined to say whether Parkinson was the right person for the job of DPP
Farage urged to explain anti-abortion links to meeting with Trump officials
Nigel Farage has been urged to explain why a US anti-abortion advocacy group helped arrange a meeting in London with Trump administration officials and diplomats.The meeting, first reported by the New York Times, took place in March between Farage and a delegation from Trump’s state department, which it said was overseen by the US embassy and brokered by the Alliance Defending Freedom (ADF) group. The meeting was said to have discussed abortion rights, free speech and online safety laws.ADF, which supports free speech and religious freedom, has worked in Britain to help challenge the prosecutions of Christians who were arrested for praying silently outside abortion clinics, breaching “buffer zones”. The group, which is non-politically partisan and says it is a human rights charity, said it was not present at the meeting and had never met with Reform UK politicians to discuss abortion law
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