Rising UK Rates Open £9 Billion Hole in Tory and Labour Plans
- Bloomberg analysis shows parties will struggle for giveaways
- Follows warning from OECD that Britain has little fiscal space
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Rising interest rates and gilt yields have punched a £9 billion ($11.3 billion) hole in the UK government finances, jeopardizing both the Conservatives’ plans to cut taxes before the election and the opposition Labour Party’s ambition to spend billions on a green energy transition.
All else equal, the jump in annual borrowing costs would wipe out the headroom against both parties’ main fiscal rule – to get the national debt falling as a share of GDP within five years.