I AM deeply concerned by Chancellor Reeves’ decision to adjust how the UK calculates its national debt, a move that effectively enables a new borrowing spree despite her election promises.

By altering debt rules, she plans to borrow an additional £57 billion for long-term projects by basically doing some “creative accounting.” 

The impact of this approach is already apparent in the bond market. 

OTHER NEWS:

The UK relies heavily on borrowing from investors worldwide, who expect low-risk returns. The bond market is sensitive to any financial tinkering that could destabilise its perception of the UK’s fiscal responsibility, and Reeves’s “debt magic” has not gone unnoticed. 

UK borrowing costs have started rising again, signalling investor uncertainty. 

Recent data show that UK gilt yields, which had fallen on expectations of lower inflation, jumped from 3.75% to 4.2% with the announcement of Reeves’s new approach. 

Bond yields are not typically this volatile, and this sharp rise could mean higher interest rates in the coming months.

According to Pantheon Macroeconomics, this increase could drive mortgage rates up further, with the average cost of servicing a £250,000 mortgage increasing by as much as £1,250 annually - an unwelcome addition to household budgets already stretched by inflation.

The Chancellor may try and justify her spending as an investment for growth, but this manoeuvre brings substantial risks to the stability of our economy.

Ordinary taxpayers will bear the brunt of these decisions if bond yields continue to rise, increasing our national debt and driving up household costs. 

We must be vigilant, as the stakes are far too high to gamble with our country’s financial future.
Roman Jones, Blachernae Farm, Welshpool